Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

FOLKESTONE HARBOUR BILL [Lords]

Read a Second time, and committed.

ABERDEEN HARBOUR ORDER CONFIRMATION BILL (By Order)

Considered; to be read the Third time tomorrow.

Oral Answers to Questions — SCOTLAND

Mr. Speaker: Before we start Scottish questions, I remind Members from Scottish constituencies that, as is my practice, I shall seek to call those who were not called last time and give them some preference.

Home Rule

Mrs. Irene Adams: To ask the Secretary of State for Scotland if he will meet representatives of the Scottish Constitutional Convention to discuss home rule for Scotland.

The Secretary of State for Scotland (Mr. Ian Lang): I have no plans to meet representatives of the convention. I have already initiated public and parliamentary debate of its proposals which were discussed in considerable detail in the Scottish Grand Committee on 24 February.

Mrs. Adams: As this is likely to be the last Scottish Question Time before the general election, will the Secretary of State indulge in a deathbed conversion and recognise the frustrations and hopes of the Scottish people about the present constitutional set-up? Will he discontinue his pre-election pact with the Scottish National party in its all-or-nothing bid? Does he agree that a meeting with the convention may not be enough to save his seat but may just save his face?

Mr. Lang: I look forward to answering Scottish questions from this Dispatch Box at the first Scottish Question Time after the general election. Then, as now, I shall do my best to ensure the protection of Scotland's best interests by maintaining its place as a full, equal partner in this United Kingdom Parliament.

Mr. Marlow: As a unionist with very good reason for having the warmest of feelings towards Scotland, may I ask my right hon. Friend to make it absolutely clear to anyone who wishes to establish an institution in Scotland with legislative powers over certain areas of policy that,

regrettably, it would be totally unacceptable for any Scottish Member of the House to have any say, vote or control over areas of policy in the rest of the United Kingdom?

Mr. Lang: I entirely understand my hon. Friend's anxiety on that point. It is an anxiety shared by several Labour Members, most notably the hon. Member for Linlithgow (Mr. Dalyell) and, more recently, the hon. Member for Livingston (Mr. Cook). My hon. Friend puts his finger on one of the central dilemmas faced by those who would advocate setting up a separate Parliament with separate powers entrenched in Edinburgh in rivalry to the Westminster Parliament. That is incompatible with the integrity of the United Kingdom Parliament. It would not be sustainable or stable in the long term.

Mr. Malcolm Bruce: Will the Secretary of State acknowledge that, given that after five years his Government have completely failed to establish a Select Committee on Scottish Affairs, he has no credibility in the constitutional debate in Scotland because he has no proposals to make? Is not that aggravated by the fact that the Prime Minister does not know what he believes about the future of Scotland? The consequence is that the only way to secure reform is to secure the defeat of every Conservative candidate in Scotland at the general election.

Mr. Lang: We know what the leader of the Liberal Democrats thinks. He thinks that a proportional representation voting system is more important than the constitutional future of Scotland. When asked whether he would support a constitutional change in Scotland if he did not have proportional representation, he said no; so he makes it clear that he gives higher priority to the self-interest of the Liberal Democrats and a voting system that would help them than to the issue of principle on Scotland's constitutional future.

Mr. Molyneaux: In the light of the Prime Minister's speech last Saturday, will the Secretary of State consider extending the consultations to which he referred to include the leaders of all parties in the House in order to find out what common ground there might be on the possibility of decentralisation of powers common to the four component parts of the United Kingdom?

Mr. Lang: The central message delivered by my right hon. Friend the Prime Minister in Glasgow last Saturday was the importance of maintaining the integrity of the United Kingdom. I am sure that that is a sentiment with which the right hon. Gentleman would warmly agree. Within the integrity of the United Kingdom, the different component parts have different interests and those are already well represented and will continue to be so within the constitutional arrangements based here at Westminster.

Sir John Stokes: Is my right hon. Friend aware that, had I not been an Englishman I would have been happy to be a Scotsman and that had I been alive in the Fifteen or the Forty-five, I would have been in the field for the Stuarts? But surely the time has come to give up those illusions and to do what is best for all of us, the best for Scotland and for the United Kingdom.

Mr. Lang: My hon. Friend epitomises what is best in this place in that he is able to represent the interests of England and of the United Kingdom in the same way that


my right hon. and hon. Friends representing Scottish constituencies are able to advance the best interests of Scotland and of the United Kingdom. We have far more to gain from helping each other and sharing representation in this United Kingdom Parliament than we have from breaking it up, as the Labour party's proposals would do.

Mr. Dewar: The Secretary of State constantly talks of the defence of the Union. Given the confusion that has arisen as a result of the Prime Minister's remarks after his speech on Saturday, does such a defence rule out now and in future for the right hon. Gentleman and the Conservative party the setting up of any form of directly elected body covering all Scotland and drawing power from Westminster?

Mr. Lang: The muddle and confusion exist only in the mind of the hon. Gentleman. The position of my right hon. Friend the Prime Minister, the Government and this party is absolutely clear. We are determined to maintain Scotland's full place as an equal partner in the United Kingdom and to create no bodies which would fragment or undermine that position. We believe that Scotland has benefited enormously from her membership of the United Kingdom and we do not wish to jeopardise her place in it.

Recession

Mr. Andrew Welsh: To ask the Secretary of State for Scotland when he next expects to meet representatives of the Scottish Council (Development and Industry) to discuss the effects of the recession in Scotland; and if he will make a statement.

Mr. Lang: I have frequent contacts with the Scottish Council and look forward to a continuing exchange of views. I am sure that the council will have noted the consensus view of economic commentators that Scotland has been less affected by the world recession than any other part of Great Britain and that Scottish economic growth this year is likely to match or exceed that of the United Kingdom as a whole.

Mr. Welsh: Having invited debate on self-government and having not received the answers for which he hoped, why is the Minister not listening to leaders of Scottish commerce and industry who say that we have nothing to fear and a great deal to gain from independence? As the United Kingdom's high interest rates and other policies are creating record bankruptcies and rising unemployment and making Scottish industry and commerce less competitive in European and world markets, how can he justify the continuation of those inappropriate Government policies in Scotland?

Mr. Lang: There is absolutely no doubt that the almost unanimous view of business men in Scotland is that the one thing that would undermine Scotland's economic future would be for Scotland to be cut off from the rest of the United Kingdom and reduced to a small home market of about 5 million people, driving away inward investment with higher tax rates and with a volatile currency dependent on the fluctuations of oil, with future uncertainty as to Scotland's continuing membership of the European Community. The recipe of the hon. Gentleman and his party for Scotland's future is a recipe for decline and impoverishment.

Mr. McAvoy: The Secretary of State will be aware that the co-operation of the work force at Hoover Cambuslang has been a major factor in ensuring the long-term viability of that factory. Bearing in mind the financial support that the Government have made available to Hoover plc for the factory at Cambuslang, will the Secretary of State join me in supporting the work force who are looking for assurances from Hoover plc that there will be no transfer of work from Cambuslang to any other location?

Mr. Lang: That is essentially a matter for the management and not for me. Certainly, it would be wrong for the Government to intervene in important management decisions. I am grateful to the hon. Gentleman for paying tribute to the fact that the Government's regional assistance policies are helping Hoover, as they have helped so many other companies in Scotland, and for the implicit acknowledgement that industrial relations have so improved under the Government that the negotiations to which he referred can take place. What a contrast with the last period of Labour Government.

Mr. Bill Walker: When my right hon. Friend meets the Scottish Council, will he draw its attention to the fact that under the SNP's proposals Scotland would lose up to about 30,000 defence-related jobs? Will he tell the council that Lossiemouth, Kinloss and Leuchars, the RAF main bases, would all close, that the Royal Marine base at Cawdor would close and that Rolls-Royce, Ferranti, GEC and others would lose their orders and Yarrows would get no orders for frigates? Consequently, Scotland would lose 30,000 jobs. What for? For separatist, socialist, nationalism.

Mr. Lang: My hon. Friend is absolutely right and puts the point extremely well. In addition to what will happen to all those defence-related jobs, it is certain that the large flow of inward investment and the jobs created from that will cease. The most recent announcement of such investment—that Matsushita will create a factory in East Kilbride with £8 million investment—follows my visit to the company in Japan last autumn. That and other inward investment will dry up.

Mr. Wilson: The Secretary of State referred to the last Labour Government. I assure him that we are extremely pleased to make comparisons with that Government in terms of unemployment statistics and the support given to Scottish industry. Will he confirm that in 1976–77 some £680 million, in current terms, was paid to Scottish industry in regional assistance? Will he also confirm that last year the equivalent figure, in current terms, was less than £160 million? What immense improvement in the Scottish economy and in unemployment justifies a 75 per cent. reduction in assistance to Scottish industry when in my constituency, for instance, the official figures show that one person in seven is out of work and the unofficial figures, based on the old count, show that almost one person in five is out of work?

Mr. Lang: I will give the hon. Gentleman the comparisons. For every four companies in existence when the last Labour Government left office there are now seven. When they left office, the rate of inflation had doubled and had averaged 15 per cent. for the previous five years; the present rate is well below 5 per cent. When the last Labour Government left office, unemployment had doubled; within the past three years, employment has risen


by 150,000. Within the lifetime of this Parliament, unemployment has fallen by 100,000 and productivity has risen by more than 5 per cent. a year. Within the past three or four years, investment has reached the highest levels ever, and in four of the past five years we have achieved record output. In the past year or two, we have achieved record exports. Those are some comparisons between this Government and the last Labour Government.

Several Hon. Members: rose—

Mr. Speaker: Order. So that I am able to call more Members, may we have briefer questions? Long questions lead to long answers.

Constitutional Reform

Mrs. Fyfe: To ask the Secretary of State for Scotland what recent representations he has had concerning the constitutional future of Scotland.

Mr. Lang: In the past six months, representations received about constitutional issues have comprised 141 letters or postcards, of which 55 were in favour of devolution, 39 were in favour of independence and 47 were opposed to either.

Mrs. Fyfe: In the past four days since the Prime Minister made his extraordinary remark about taking stock after the general election, has the Secretary of State for Scotland got around to clarifying what was meant by that?

Mr. Lang: The Prime Minister, like the leaders of all political parties and like all candidates in the election, will be taking stock the day afterwards. My right hon. Friend will be taking stock of the increased number of Members representing the Conservative party. A more appropriate phrase for the Opposition would be "licking wounds".

Mr. Harry Ewing: When the Secretary of State considers constitutional change, will he disregard the position of the SNP? Having listened on Monday for a fairly long time to the SNP pleading to leave the Union, I noticed that the leader of the parliamentary group, the hon. Member for Moray (Mrs. Ewing), could not get down to Westminster quick enough to sit beside the heir to the throne at a dinner. If that is not near the the United Kingdom establishment, I do not know what is.

Mr. Lang: Far be it from me to intervene in family squabbles between two members of two socialist parities. I content myself with standing firm on the only piece of strong ground in the constitutional argument, which represents those who believe in the maintenance of Scotland's place in the United Kingdom. That is the position to which we are committed.

The Speaker: I call Mrs. Margaret Ewing—[Interruption.] Order. The hon. Lady was mentioned.

Mrs. Margaret Ewing: Leaving aside the rather sour comments of the hon. Member for Falkirk, East (Mr. Ewing), may I ask the Secretary of State whether he believes in the Meccano engineering ideas propounded as a way to resolve the constitutional issue in Scotland—such as the Scottish Grand Committee meeting more often in Scotland, or even the Cabinet meeting in Scotland? Does not the right hon. Gentleman realise that that would be viewed by the Scots as tinkering with an unacceptable

solution? Will he deal with the fundamental issue that the Scottish people have placed firmly on his doorstep, which is the need for a facility to establish the right of the Scots to self-determination?

Mr. Lang: I do not believe in tinkering with the constitution and that is where I part company with all the parties on the Opposition Benches. Whether they would deliberately break Scotland free from the remainder of the United Kingdom, which is the policy of the hon. Lady's party, or do that by degrees and in disguise, which is the policy of the Liberal Democrats and the Labour party, the end product would be the same. The only protection of Scotland's place within the United Kingdom is the sovereignty of this United Kingdom Parliament.

Mr. Adley: Although I recognise that the West Lothian question remains to be answered, some of those who have listened to the arguments for more than 20 years still find the arguments of our right hon. Friend Lord Home rather more seductive than the argument of our right hon. Friend the Member for Finchley (Mrs. Thatcher). Is not it a cause of some concern that ever since 1975 support for our party in Scotland has been declining? Has not our party always been in favour of decentralisation? When my right hon. Friend returns to office, as he will in the next Government, will he initiate some discussions that will enable us to arrive at a solution to the problem that satisfies all parties?

Mr. Lang: My hon. Friend is right to identify the principle of devolution as important to our party. That is why we devolved power from the Government to the people; that is why we devolved power from the centre to the outlying parts. However, my hon. Friend's memory of history is a little shaky. If he reflects, he may recall that after the last occasion on which the constitutional question was directly addressed in a referendum in 1979, the strength of the Scottish Conservative party rose considerably in the subsequent Parliament. In that referendum campaign, support for a devolved assembly fell from 70 per cent. at the beginning to just above 30 per cent. at the end.

Hospital Building

Mr. Ron Brown: To ask the Secretary of State for Scotland when he last met the chairman of Lothian health board to discuss the hospital building programme.

The Minister of State, Scottish Office (Mr. Michael Forsyth): I meet health board chairmen on a regular basis and from time to time we discuss the hospital building programme, which is the biggest in the history of the national health service in Scotland.

Mr. Brown: I am grateful to the Minister for that statement. He is aware that the Scots want self-determination and their own Parliament—

Mr. Speaker: Order. The question is about Lothian health board.

Mr. Brown: I am grateful to you, Mr. Speaker.
The Scots, especially Leithers, want democratic control of the health service. Last year, they were promised a new hospital for Leith. No brick has been laid, and I understand that the Minister has done nothing about that. If he is anxious about the Scottish dimension, will he advise the bureaucrats on the health board and in his


Department about what the people want? They certainly want a decent health service and we desperately need a hospital in Leith.
Will the Minister ensure that a clinic is established to look after HIV patients? It is no use suggesting, as I understand has been suggested, that sufferers of that disease should be shunted up a side street in my constituency. This is an emotive issue. I say to the Minister—

Mr. Speaker: Order. It is not fair for the hon. Member to take so long.

Mr. Brown: It is not fair on the people in my constituency—

Mr. Speaker: Order. That is enough, please.

Mr. Forsyth: The hon. Gentleman does a disservice to the health service in Lothian, which has excellent facilities for HIV patients, and a specialist unit in Edinburgh was provided by the Government during the term of this Parliament. As to new hospitals, I am astonished that the hon. Gentleman is unaware that Lothian health board proposes to develop Leith hospital and to provide geriatric and psychogeriatric beds. Its proposals will come before Ministers shortly, although the board will have to consult on them. Does the hon. Gentleman also not know that Lothian health board plans to spend £200 million on a new teaching hospital for Edinburgh and new acute facilities? That is more than the last Labour Government spent on new building in the whole of Scotland in every year of office. The hon. Gentleman has a real nerve coming to the House to complain about Lothian health board's record, which is second to none.

Mr. Galbraith: Is not the Minister aware that the new Edinburgh teaching hospital was planned under the last Labour Government, and that it has taken 12 years for the Conservative Government to reach any decision? Is not the Minister further aware that my hon. Friend the Member for Edinburgh, Central (Mr. Darling) and I have been informed that an announcement about that new hospital is being delayed until the general election campaign? Will the Minister confirm that it is part of the Government's cynicism and continuing propaganda to sit on that announcement until the election campaign begins?

Mr. Forsyth: I have no idea when the general election will be, but if the hon. Gentleman thinks that it will be held in the immediate future, Lothian health board will certainly not be in a position to present its acute strategy. I have no doubt that a Labour Government planned all sorts of things, but they were the only Government in the history of the health service to cut the health building programme. That is Labour's record. This Government have presided over the biggest health building programme in the history of the NHS. Good intentions do not treat the sick, but this Government have treated the sick.

Local Government Finance

Mr. Dunnachie: To ask the Secretary of State for Scotland whether he has any plans to meet the Convention of Scottish Local Authorities to discuss financial problems of local authorities.

The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart): As part of the normal

consultation on local government finance matters, my right hon. Friend the Secretary of State and I plan to meet the convention on 3 April.

Mr. Dunnachie: Surely all right hon. and hon. Members agree that the poll tax is the most obnoxious ever devised by man. Does not the Minister agree that the poorest and neediest—old-aged pensioners, and the unemployed—should have received a 100 per cent. guaranteed rebate since the tax started, and that those who have been forced to pay 20 per cent. of their poll tax should receive refunds?

Mr. Stewart: There is a problem of non-collection in Strathclyde, but the average 20 per cent. increase in non-collection for Scottish local authorities as a whole is mainly due to Strathclyde's 35 per cent. increase. If the hon. Gentleman wants to identify the real problem, he ought to attack the real villain, Tommy Sheridan of the Anti-Poll Tax Federation, who I believe is to stand against the hon. Gentleman. Does not the hon. Gentleman have the guts to do so?

Mr. Speaker: Mr. Lambie:

Mr. Lambie: Thank you, Mr. Speaker, for calling me in what will be my last Scottish Question Time after nearly 22 years' service in the House. I take this opportunity, Mr. Speaker, to wish you well on your retirement to another place.
Is the Minister aware that one of the unemployment and social black spots of Cunninghame is the three-towns area of Ardrossan, Saltcoats and Stevenston? As a result of prompting by the Stevenston branch of the Labour party, a three-towns initiative has been launched, involving the two Members of Parliament representing Cunninghame constituencies, Strathclyde and Cunninghame local authorities and the two relevant Members of the European Parliament? Will the Minister meet a deputation to discuss what financial help the Government can give to ensure the success of that initiative?

Mr. Stewart: If this is the hon. Gentleman's last Scottish question time, that will be a matter of regret throughout the House. The hon. Gentleman has represented his constituents with a great deal of vim, vigour and dedication; on behalf of those constituents, he has been a thorn in the flesh of successive Governments—especially Labour Governments.
The short answer to the hon. Gentleman's question is this: I understand what he has said and if he wishes to meet me to discuss that particular constituency matter, I shall of course agree.

Mr. John Marshall: Does my hon. Friend agree that the problem of local government finance in Scotland has been aggravated by those who refuse to pay the community charge? Is it not a scandal when Members of Parliament, such as the hon. Member for Dunfermline, West (Mr. Douglas), belong to the "can pay but won't pay" brigade? Law-makers should never become law-breakers.

Mr. Stewart: My hon. Friend is absolutely right to say that potential law-makers cannot and should not be law-breakers.
The settlement announced by my right hon. Friend the Secretary of State for Scottish local authorities in the coming year is extremely generous. The original aggregate external finance settlement of 6·1 per cent. has now been


increased by an extra £6·7 million to 6·3 per cent. That figure is well ahead of the rate of inflation, and it is a more than reasonable settlement.

Mr. Maxton: When will the Minister stop hiding behind the "can't pay, won't pay" brigade, and admit that the whole chaos of the poll tax was caused by him and his supporters who instituted the tax? Does he not recognise that the poll tax will come back to haunt the Conservatives during the election campaign as next year's poll tax bills flood through the post boxes? Will he now accept that the one step that he can take to ensure an easier collection of the poll tax during its last year is to abolish the 20 per cent. minimum payment on 1 April this year, rather than waiting until next year?

Mr. Stewart: There is another hon. Member who does not attack Tommy Sheridan.
The Government's position is absolutely clear. Let me point out that the personal community charge for Lothian is to be increased by only 2·6 per cent. May I also remind the hon. Gentleman that, as far as I understand it, his policy is to bring back the rates in Scotland?

Mr. Maxton: indicated assent—

Mr. Stewart: The hon. Gentleman nods. Good—keep nodding. He will bring back the rates in Scotland, at the levels that will operate after a Scottish revaluation. He could not do that in England. If he thinks that that will help the cause of the United Kingdom, he is making a grave error.

Labour Statistics

Mr. Robert Hughes: To ask the Secretary of State for Scotland what is his estimate of the number of people in Scotland who are economically active, unemployed and not receiving unemployment benefit.

Mr. Allan Stewart: Based on the labour force survey results from 1987 to 1990 an estimated annual average of 90,000 people in Scotland fell within the International Labour Organisation definition of unemployed, but were not included in the monthly claimant count statistics. This compares with 80,000 people in the claimant count who did not fall within the ILO definition of unemployed.

Mr. Hughes: Do not the figures show the damaging effects of the Government's policy on unemployment in Scotland? Does the Minister accept that, after we have discounted the 23 fiddles on the figures that he has carried out, the true figure for unemployment in Scotland is over 350,000—110,000 more than the figure to which he officially admits? When will the Minister throw off his damaging complacency and act to remove this black spot from the Scottish economy?

Mr. Stewart: The House will recognise why the hon. Gentleman has made those somewhat uncharacteristic partisan comments. No doubt he is worried about his marginal seat. Since January 1987, unemployment in Grampian has fallen by about 13,350. It is undoubtedly the case that his area of the country has been doing extremely well economically under this Government. That cannot be denied. That is why the Conservatives will do particularly well in the north-east of Scotland in the forthcoming election.

Mr. Tom Clarke: Does the Minister accept that the figures will not be helped if the speculation about the Gartcosh recycling paper project, which appeared in this morning's press, has any accuracy at all? Would it not be a disaster if Germany succeeded where we failed? Does he also accept that unless he gives full encouragement to Dumbarton Enterprise and the Lanarkshire development agency, this project will not succeed and that Gartcosh will therefore become, for the second time, the location for a Tory industrial disaster?

Mr. Stewart: It certainly would not be helped by the prospect of a Scottish assembly. That is for certain. May I point out to the hon. Gentleman, however, because I recognise that he is representing the concerns of his constituents, that I do not comment on speculative reports. May I also underline the massive support that the Government are giving to Lanarkshire. A question appears later on the Order Paper about that. If the hon. Gentleman wishes to see me personally about that project, I shall be happy to meet him.

Mr. Oppenheim: Does my hon. Friend accept that to many people south of the border the Scots have the reputation of being hardy, robust, tough, thrifty if somewhat dour people, as borne out by the fact that there are more people in work in Scotland now than there were in 1979, that Scottish exports are far higher now than they were in 1979 and that Scottish manufacturing exports are far higher now than they were in 1979? Is it not a shame that that positive image is so often threatened by the whingeing, whining, craven attitude of so many of the Members of Parliament whom the Scots choose to send to Westminster?

Mr. Stewart: I feel that I have to disagree with my hon. Friend. I have never before been described as somewhat dour, but my hon. Friend's basic case is absolutely right. There is no doubt at all, as every commentator has confirmed, that during the present world recession the Scottish economy has been doing extremely well. We are coming through the problems extremely well in order to face the challenges of the future. That is a tribute to a very large number of people in industry, in management and in the trade union movement. My hon. Friend is right to point out that we in Scotland should be proud of our achievements.

Borders Economy

Mr. Kirkwood: To ask the Secretary of State for Scotland what proposals he has to assist the prospects of the local economy in the Borders region; and if he will make a statement.

Mr. Allan Stewart: Borders region benefits, along with the rest of Scotland, from the Government's firm economic policies which are aimed at further reducing inflation and reducing cost and other burdens on industry. In addition, since April of last year, Scottish Borders Enterprise has been able to bring to bear substantial public resources through integrated training, economic development and environmental activity.

Mr. Kirkwood: Does the Minister agree that the recent disturbingly high increase in the percentage rates of unemployment in the region underscore the urgent need for Government action now? Does he also agree that


because the Borders region is denied access to development assistance of any kind, either from the Treasury or from the European Community, the prospects for the local economy are damaged? Can he give an undertaking now to review urgently in the next Parliament the whole question of the criteria for eligibility for development aid status and in particular to reconsider urgently the region's claim, so that it can deal with some of its economic problems?

Mr. Stewart: It is the Government's intention to review the assisted area map in the next Parliament. I think that the hon. Gentleman will recognise that there are substantial arguments in favour of a period of stability for the boundaries of a particular assisted area. I do not underestimate the problems to which the hon. Gentleman has referred, but may I emphasise that Scottish Borders Enterprise has been doing a great deal with the support of hon. Members and others to assist the economy of the borders. For example, Scottish Borders Enterprise has provided £1 million to support the borders textiles initiative. The hon. Gentleman and his right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) have asked for a meeting with me to discuss the matters. I understand from my office that the date of that meeting has been agreed.

Mr. Home Robertson: Can the Minister confirm that one of the biggest handicaps for the economy of the borders and adjacent regions is the intolerably dangerous and congested A1 road? Now that the Government have figures which confirm that the A1 in my constituency is carrying as much traffic as the A74 and 35,000 people have signed a petition calling for dualling of the A1, will he confirm reports that the Government are about to concede the case for dualling? If so, will he accept that that death-bed conversion of the Government will be most welcome?

Mr. Stewart: I do not read of any commitment by the Labour party to increase expenditure on Scottish roads. Has the hon. Gentleman checked that with his right hon. and learned Friend the Member for Monklands, East (Mr. Smith)? There is no such commitment. The A1 steering group, which was set up by the Parliamentary Under-Secretary of State for Scotland, my hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton), comprises officials of all the relevant authorities and is monitoring traffic and accidents on the A1 so that priority can be given to accident remedial action. A route action plan in respect of the A1 between Edinburgh and Newcastle is being developed. The Government's position on improvements to the A1 is clear, but there is still no commitment from the Labour party.

Sir David Steel: rose—

Mr. Speaker: Mr. McMaster.

Mr. McMaster: No. 8, Sir.

Sir David Steel: On a point of order, Mr. Speaker.

Mr. Speaker: Order. The right hon. Gentleman must take his chance on these matters. I have already called one hon. Member from his party. With the best will in the world, I cannot call every hon. Member who has a constituency interest in every question.

Sir David Steel: On a point of order, Mr. Speaker.

Mr. Speaker: I shall not take the point of order in the middle of Question Time. The right hon. Gentleman can raise it afterwards.

Sir David Steel: On a point of order, Mr. Speaker.

Mr. Speaker: Order. I repeat to the right hon. Gentleman that I am not taking his point of order in the middle of Question Time.

Social Problems

Mr. McMaster: To ask the Secretary of State for Scotland when he next plans to meet representatives of the Convention of Scottish Local Authorities to discuss strategies to tackle social problems.

Mr. Michael Forsyth: I have had useful meetings with the convention's social work committee to discuss our community care strategy and residential care. I see no reason why this should not continue for many years.

Mr. McMaster: Does the Minister recall that it was his Government which told young Scots to get on their bikes if they had no hopes and no homes? Does he realise that many thousands of young Scots took that advice and came to London, only to find cardboard homes and cardboard hopes? Will he support the campaign launched by Centrepoint today and even at this late stage, after 13 wasted years of Tory rule, take steps urgently to end the housing crisis in Scotland and to give our young people a future there?

Mr. Forsyth: It is this Government who have given young people a guarantee of a place in higher or further education or training. No other Government have done that. On housing, does the hon. Gentleman realise that the Government have spent £1 billion every year since 1989 on housing in Scotland? Is he unaware of the action which my hon. Friend took this very week when he distributed another £7·5 million to local authorities to deal with homelessness? The hon. Gentleman should recognise what the Government have done and he should also recognise that his party is promising nothing in this area.

Mr. Canavan: In view of Scottish local authority support for constitutional change, will the Minister tell us which of the Prime Minister's weekend statements he agrees with—the one on Saturday when he resolutely defended the status quo or the one on Monday morning when he was forced to admit that he would have to take stock of the situation after the general election? Bearing in mind that the majority of people in Scotland want a Scottish Parliament with legislative and economic powers, does the Minister support his Prime Minister in encouraging the people of Scotland to take the zero option by achieving a complete wipe-out of Scottish Tory Members at the next general election, including the hon. Member for Stirling (Mr. Forsyth)?

Mr. Forsyth: If the hon. Gentleman had been certain about the Labour party's prospects in Stirling, he would not have run away to Falkirk when he was the Member of Parliament for part of that area. The Prime Minister's message was clear. The hon. Gentleman has demonstrated


today that those who wish to preserve the Union with the United Kingdom have only one party to vote for at the general election and that is the Conservative party.

Mr. Worthington: Will the Minister meet the Convention of Scottish Local Authorities urgently to discuss the problem of mounting youth unemployment in Scotland? To use just one example, in Strathclyde there is now a shortfall of 3,700 training places. A total of 3,000 fewer training places have been offered this year than last. How can the Minister claim that the guarantee is being met when there is such a shortfall? When he meets COSLA, will he discuss Scottish Enterprise's training budget? Figures that I have obtained from Scottish Enterprise make it clear that there has been a cut of 15 per cent. overall at a time of mounting youth and adult unemployment. Nearly 20 per cent. has been cut from the training budget. There is mounting long-term unemployment—

Mr. Maclennan: On a point of order, Mr. Speaker.

Mr. Speaker: Order. Nothing out of order has occurred.

Mr. Maclennan: The hon. Member for Clydebank and Milngavie (Mr. Worthington) is making a speech.

Mr. Speaker: That is up to me.

Mr. Worthington: In 1988–89 the Government cut the training budget because they said that there was falling unemployment. Why, when there is mounting unemployment, have they cut the training budget for Scottish Enterprise by 15 per cent?

Mr. Forsyth: The hon. Gentleman surely knows that we are spending 2·5 times as much on training as the last Labour Government. That is undeniable. The hon. Gentleman has come to the House and asked about unemployment when he is a member of a party that wishes to put a tax on jobs through its training levy, wishes to destroy employment by introducing a minimum wage and, worst of all, wishes to make Scotland the highest taxed part of the United Kingdom with its proposal for an assembly. Those policies would destroy jobs. The hon. Gentleman knows that and it is why he does not want to hear the facts.

Scotland in Europe

Mrs. Ray Michie: To ask the Secretary of State for Scotland when he last met representatives of the European Commission to discuss Scotland's role in Europe.

Mr. Lang: I met President Delors and Commissioners Milian and Brittan in Brussels in March 1991 and Commissioners MacSharry and Andriessen in Strasbourg in July 1991 to discuss issues of relevance to Scotland.

Mrs. Michie: Does the Secretary of State agree that one of the most important issues facing Scotland today is the future of the fishing industry? Will he give an undertaking to the House today that he will lead the United Kingdom delegation in the forthcoming talks on the common fisheries policy so that he can be actively involved in securing EC money for a decommissioning scheme? He must agree that fishing is a top priority. If he will not do that, it is yet another reason for us to have a Scottish Parliament to look after our own affairs.

Mr. Lang: I take a great and close interest in fishing matters and the Scottish Office has been represented at no fewer than 17 Councils of fishing and agriculture Ministers over the past three years. I believe that our changed proposals for the tying-up arrangements have been widely welcomed by the fishing industry. If a Scottish Parliament were set up in Edinburgh and took control of fisheries matters, Scotland's voice at the centre, where it matters, would be substantially diminished because responsibility would continue to reside with the United Kingdom Parliament.

Mr. Wray: Can the Secretary of State for Scotland explain to the House what would happen if Scotland were to renegotiate the terms? Would not it find itself in the same position as Greenland, which had to get permission from the Danish Parliament to clear the road? It would have to be accepted by the European Parliament. Bureaucrats in Brussels are getting ready to jackboot smaller countries by asking them to enter into a troika agreement to takeover the presidency.

Mr. Lang: Constitutional change of the kind envisaged by the Scottish National party or by the Labour party or the Liberal Democrats would undermine Scotland's access to the Commission and the European Community and our ability to represent our case there. The best prospect that Scotland has in Europe and within the United Kingdom is to remain within the United Kingdom Parliament.

Mr. Gill: Having heard the answer that my right hon. Friend gave—

Hon. Members: "Who is this?"

Mr. Speaker: Order. In a United Kingdom Parliament, the hon. Gentleman has a right to put a question.

Mr. Gill: Is there any area in which an independent Scotland would have more influence in the European Community than under the present arrangements?

Mr. Lang: I am grateful to my hon. Friend. I cannot think of any.

Mallaig Road

Sir Russell Johnston: To ask the Secretary of Stale for Scotland what progress there has been on the Fort William to Mallaig road.

The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton): Since 1985, two major schemes worth more than £8 million have been completed on the A830. The additional funding for roads announced by the Secretary of State means that we plan to start the Morar bypass scheme in the coming financial year, 1992–93.

Sir Russell Johnston: Does the Minister agree that the exciting proposals for the development of Mallaig harbour, which are with the Scottish Office, make it urgent that the remaining sections of the road are completed as soon as possible?

Lord James Douglas-Hamilton: I believe that this will be very good news indeed for the people of Morar. The hon. Member will be aware that Morar is famous for the northern lights, presented in the Scottish film "Local


Hero". This will mean that although there may be no oil under Morar or Morar beach, Morar and its inhabitants will soon have a new road.

Lanarkshire Economy

Dr. Reid: To ask the Secretary of State for Scotland what representations he has received regarding the Lanarkshire economy; and if he will make a statement.

Mr. Allan Stewart: My right hon. Friend has received representations from a number of sources concerning the Lanarkshire economy. A large number of projects, backed by substantial additional resources, are now being undertaken through the Lanarkshire development agency to ensure the successful regeneration of Lanarkshire.

Dr. Reid: After more than 150 months of this Government and more than 100 Scottish Question Times, do the Secretary of State and his colleagues accept that this is their last opportunity to redeem themselves for the betrayal of the Scottish steel industry? Is the Minister aware that Labour has made it plain that we shall give not only technical but financial assistance to any commercially viable project for developing new technology at Ravenscraig? On this last occasion before Ministers demit office, will they give a pledge that the Government will match our pledge of financial and technical assistance for the Lanarkshire steel industry to develop thin-slab technology? If the Minister cannot give that pledge, the day after the next election they will not be taking stock but will be a laughing stock in Scotland.

Mr. Stewart: I must remind the hon. Gentleman of the provisions of the treaty of Paris, which his party accepts, does it not? On the hon. Gentleman's second question about financial resources, my right hon. Friend the Secretary of State has decided that overall resources available to the Scottish Enterprise network for next year, subject to the approval of the House, will be increased by £9·6 million over the total that he announced last autumn. We have received reasoned representations from the district councils in Lanarkshire concerning the provision of new factories and how they can assist Lanarkshire's economic regeneration. My right hon. Friend intends to increase the resources available to those district councils by about £8 million. The hon. Gentleman will recognise that these figures show a real commitment to Lanarkshire. I do not in any way underestimate his commitment to his constituents, but when we debated these matters the Opposition Front Bench did not promise an extra penny for Lanarkshire if there were to be a Labour Government.

Mr. Dewar: One of the key agencies in the fight to strengthen the Lanarkshire economy is the Lanarkshire development agency. Will the Minister guarantee that local enterprise companies will get at least as much money next year in real terms as they are getting in the current year? Does he accept that today's announcement about the Scottish Enterprise budget for 1992–93 will be seen as election window dressing? Will he confirm that the Scottish Office is finding only an additional £1 million from its own resources and that its contribution to Scottish Enterprise will fall next year by almost £15 million?

Mr. Stewart: The hon. Gentleman shows his customary predilection for turning good news into misery at every possible opportunity. I repeat the figures: my right hon.

Friend has announced that the resources available to the Scottish Enterprise network are being increased to £462·6 million, an increase of £9·6 million on the total announced last autumn. It is interesting that the hon. Gentleman gave no commitment that the resources would be increased if there were a Labour Government. Indeed, he has not denied that the resources might even be reduced if there were a Labour Government.

Constitutional Reform

Mr. Watson: To ask the Secretary of State for Scotland what plans he has to make changes to the current structure of government in Scotland.

Mr. Lang: The Government are consulting at present on possible changes to the structure of local government in Scotland.

Mr. Watson: If the Secretary of State believes what he has recently been saying about the constitutional issue in Scotland, he is gravely mistaken. He is only human and we all make mistakes from time to time, but the key is whether we learn from them. The Secretary of State has consistently refused to learn from his often-repeated mistake of assuming that he knows what is best for the people of Scotland and that they do not. Let me spell out what they have been saying to him in opinion polls for some time—the status quo is not an option. The Prime Minister appears to have grasped that fact, as have some of his parliamentary candidates, so when will the Secretary of State grasp it and enter the real world of Scottish politics?

Mr. Lang: If the hon. Gentleman believes that Scotland's future is not to remain within the United Kingdom Parliament, he had better stand up and say so and then join a party which represents that view.

Teacher Training

Mr. Steen: To ask the Secretary of State for Scotland if he has any plans to bring the teacher training programme in Scotland into line with that applying in England.

Mr. Michael Forsyth: The teacher training reforms in England will bring practice near to that followed at present in Scotland. As part of a review, a pilot which will provide even more school-based training for secondary teachers will be carried out by Moray House college of education.

Mr. Steen: Does the Secretary of State agree that the importance of teacher training is such that more time should be spent with children and chalk rather than ideological and philosophical lectures? Does he agree that he should tell the Secretary of State for Education and Science that it would be best to follow the two-year probationary procedure in England because it is well known in Scotland to produce excellent teachers? Does he also agree that the experiments being carried out in Moray House and its excellent record are second to none?

Mr. Forsyth: I agree with much of what my hon. Friend says. I make it clear to the House that in Scotland it has been the practice for teacher training to be much more classroom based and I should like to see further progress in that respect. I agree that people south of the border can learn from what has been achieved there.

Farming and Crofting

Mr. Maclennan: To ask the Secretary of State for Scotland when he expects to meet the chairman of the National Farmers Union of Scotland to discuss the future of farming and crofting.

Mr. Michael Forsyth: My right hon. Friend expects to meet the president of the National Farmers Union on 5 March at its annual conference. My noble Friend the Minister responsible for agriculture in Scotland and I will also be present.

Mr. Maclennan: Is the Minister aware that farm incomes in Scotland in the past five years have fallen by 47 per cent. and in the past year by 38·5 per cent? As he approaches the negotiations for reform of the common agricultural policy, what steps will Scottish Ministers take to reverse that trend?

Mr. Forsyth: The hon. Gentleman is right to point out the serious decline that has taken place in farm incomes and right to underline the importance of the negotiations on CAP reform. It is vital that the discriminatory proposals emanating from Commissioner MacSharry should be resisted. They would be a disaster for Scottish farming and the Government will fight them every inch of the way.

Housing Investment

Mr. Strang: To ask the Secretary of Stale for Scotland what plans he has to stimulate housing investment in Edinburgh.

Lord James Douglas-Hamilton: Edinburgh district council's provisional housing capital allocations for 1992–93 total over £53 million. In addition, I understand that Scottish Homes plans to spend over £24 million in Edinburgh in 1992–93.

Mr. Strang: Is the Minister aware that these changes are trivial compared with the hundreds of millions of pounds of Government support for housing which Edinburgh and other Scottish cities have lost as a result of changes in policy introduced by the Conservative party over the past 12 years? Edinburgh faces a desperate housing crisis. When will the Government face up to that? Surely, as a Member representing Edinburgh, the Minister appreciates that hundreds of families are suffering as a result of the desperate shortage of homes to let there.

Lord James Douglas-Hamilton: The last Labour Government enormously reduced capital allocations for housing. In the accounts sent in by Edinburgh district council—a Labour-controlled body—the £45 million that it would cost to complete the backlog was missed out. We are now sorting that out; we have made an allocation of £12·9 million and we will fully consider Edinburgh's claims when we make the final allocations in early March.

Points of Order

Dame Elaine Kellett-Bowman: On a point of order, Mr. Speaker, of which I have given the relevant Member notice. Has the hon. Member for Livingston (Mr. Cook) asked leave to make a personal statement about the

misstatements that he made at column 163 during last week's health questions regarding cataract operations in Bath? Those statements have been corrected today in The Times. They were wholly misleading, and it is quite wrong that Hansard should contain mistakes of that nature.

Mr. Speaker: I have not had any request of that sort—

Several Hon. Members: rose—

Mr. Speaker: Order. Nor am I responsible for answers given at Question Time.

Several Hon. Members: rose—

Mr. Speaker: I will take Sir David Steel.

Sir David Steel: On a point of order, Mr. Speaker. I hope that you will take it as a kindly gesture on the eve of your retirement if I offer you a map of Scotland. I happen to be one of only two Members representing the Borders region, yet you called a Member from outside that area earlier. I do not object to that, but, given that I was referred to in the Minister's answer, I do think I might have been called.

Mr. Speaker: I know that, but I hope that the right hon. Gentleman will understand that I had to have regard to the fact that his hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan) had Question 14. At Scottish questions I try to get at least to Question 15, which we just achieved today. If I called every hon. Member with a constituency interest, on Question 4, for instance, I would have had to call about half a dozen from the Lothian region. It is just not possible.

Mr. Alexander Eadie: On a point of order, Mr. Speaker. As it now seems to be in order to complain, may I tell you that after 26 years in this House this was my last chance to have a say in Scottish Question Time. So I was surprised that you did not call me, given that I am one of the senior Members here and I made every endeavour to catch your eye. I wish you well in your retirement, but I am disappointed that I did not have the opportunity to be called on this occasion.

Mr. Speaker: I am sorry too. Perhaps the hon. Gentleman would like to come and have a glass of Scottish wine with me some time.

Several Hon. Members: rose—[Laughter.]

Mr. Speaker: Order.

Dr. Norman A. Godman: On a point of order, Mr. Speaker. Did you call Question 16 as the hon. Member for Lancaster (Dame E. Kellett-Bowman) shouted:
On a point of order"?
I thought that I heard you call Question 16.

Mr. Speaker: Actually, I did not. I had hoped to be able to do so, but my eye was caught by 3:31 on the clock, so it was not possible.

Mr. Max Madden: May I assure you, Mr. Speaker, that my point of order is not prompted by the very generous offer that you have just made? Many of us expected that it might have been made more widely, but never mind.
I raise a matter with you as guardian of the interests of all hon. Members. Officials of the British and Indian Governments are negotiating an extradition treaty. I am advised that the conclusion of a treaty is an act of state, but that, if the international obligations of such a treaty are to be capable of being enforced in the courts of this country, there must be an amendment to an existing Act of Parliament or statutory instrument giving effect to the provisions of any treaty.
As an extradition treaty between this country and India would have profound political repercussions, may I ask you to make inquiries into the matter to assure the House that, if such a treaty is signed, all hon. Members will have a proper opportunity to consider and debate the matter before any treaty is signed and before Parliament is dissolved?

Mr. Speaker: I am not aware of what the hon. Gentleman is alleging. I will certainly look into the matter—although it is, of course, a matter for the Government and not for me.

Mr. Tom Clarke: On a point of order, Mr. Speaker. May I refer to a disturbing report in The Guardian this morning, which was headed: "Ford switch to Germany may cost 1,200 UK jobs"?

Mr. Speaker: Order. That is the point. The report says "may". It is a hypothetical question and not a matter of order for me now.

Mr. Clarke: With respect, the report says that Ford has confirmed that a study is taking place. My question—

Mr. Speaker: Order. The hon. Gentleman should raise the matter with the Government tomorrow at business questions, when he may well get an answer. Reports of discussions that may be about to take place are not a matter of order for me.

Mr. John McFall: May I draw to your attention, Mr. Speaker, the fact that I was not called at the last Scottish Question Time and that today, although I stood up for seven separate questions, I was yet again not called? This is a day for not being served. In the light of your offer to my hon. Friend the Member for Midlothian (Mr. Eadie), may I say that my constituency is the home of Scotch whisky—[HON. MEMBERS: "No."] Indeed. Speaker's Choice whisky is based in Dumbarton. In the light of your treatment of me today, any potential offer of whisky on my part will be withdrawn.

Mr. Speaker: I was about to say to the hon. Gentleman that he was welcome to come as well, but could he kindly bring a sample with him?

Mr. David Winnick: I wonder whether you can satisfy my curiosity—

Hon. Members: No.

Mr. Speaker: Let us get on with it. That is hypothetical too.

Mr. Winnick: You will know that there is invariably a Government statement on Opposition days. Sometimes you decide to limit the exchanges. Why is it that, whenever there is a Government motion down for debate, as there is today, there is never a statement? Is there any link?

Mr. Speaker: That is not a matter for me. A large number of hon. Members wish to participate in the debate. Of course, the Opposition will seek to amend the Government's motion, so we shall debate that.

Mr. Dennis Canavan: On a point of order, Mr. Speaker. Earlier, during Scottish Question Time, the Minister, the hon. Member for Stirling (Mr. Forsyth), falsely accused me of moving my parliamentary base from Stirling to Falkirk. I have never in my parliamentary history had the privilege of representing the people of Stirling. The hon. Gentleman who made that false accusation will soon be deprived of that privilege.

Mr. Speaker: On that note, we shall move on to the ballot for notices of motions.

Oral Answers to Questions — BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY 13 MARCH

Members successful in the ballot were:

Sir Michael Neubert
Mr. Ray Powell
Mr. Andrew Rowe

Oral Answers to Questions — BILL PRESENTED

HARE COURSING

Mr. Harry Cohen, supported by Mr. Tony Banks, Mr. Harry Barnes, Mrs. Rosie Barnes, Mr. Gerald Bermingham, Mr. Andrew Bowden, Mr. Peter Griffiths, Mr. Doug Hoyle, Mr. Simon Hughes, Mr. Steve Norris, Mr. Robin Squire and Mr. Andrew Welsh, presented a Bill to make hare coursing illegal: And the same was read the First time; and ordered to be read a Second time upon Friday next and to be printed. [Bill 92.]

Oral Answers to Questions — SCOTTISH GRAND COMMITTEE

Motion made, and Question put forthwith pursuant to Standing Order No. 97(1) (Matters relating exclusively to Scotland).

That the Matter of the constitutional implications for Scotland of a Scottish Parliament, being a Matter relating exclusively to Scotland, be referred to the Scottish Grand Committee for its consideration.—[Mr. John M. Taylor.]

Question agreed to.

Elimination of Poverty in Retirement

Mr. Jeremy Corbyn: I beg to move,
That leave be given to bring in a Bill to require local authorities and health authorities to monitor the condition of their retired population; to eliminate standing charges on gas, electricity and water; to exempt pensioners from licence charges and telephone rental; to extend pensioners' concessionary fare schemes; to make provision for the calculation of old age pensions by reference to average earnings; and to appoint a Minister with responsibility for retired people.
This is the eighth time that I have tried to introduce the Bill. On every occasion, I have been given permission to bring in the Bill, but it has been subsequently blocked by a Tory Whip muttering, "Object," in a guilty whisper, because the Government are not prepared to debate the issue.
The Bill would make life far better for the 10 million people in this country who are retired, who have made a great contribution to our society and who have given us the standard of living that we currently enjoy. We should treat them with dignity and respect in retirement, instead of the poverty in which so many of them must live.
The old-age pension was first introduced not by the munificence of the then Liberal Government but by the demands of trade unions and ordinary people that the state should provide a decent old-age pension for people who had given a lifetime of work, whether at home, in a factory or wherever else. Now, after 12 years of this Government, from 1 April the old-age pension will be £54·80 per week. It should be £71·80 per week. For a married couple, the pension will be £86·70 per week. It should be £114·70 a week. In other words, pensioners have had £17·65 a week stolen by the break of the link with earnings in 1980 and the substitution of the link with prices. Likewise, the married couple's pension has been reduced by £28 per week.
The Government claim that there has been a 36 per cent. increase in the incomes of pensioner families during their term of office. That is simply and absolutely untrue for the majority of pensioners. In 1979, only 14 per cent. of households were below 50 per cent. of average national income. By 1988, that figure had more than doubled, to 38 per cent. It is a measure of the Government's record that pensioners are getting historically low pensions, historically living in greater poverty and historically having greater difficulties surviving because the Government's strategy is continually to reduce the level of state benefit and state old-age pension in favour of private pension schemes and private insurance schemes.
From investigations into the scandal of the Maxwell and Mirror pension funds, one can see the security and safety of investing money in a casino economy when pensioners should be guaranteed a decent state pension in retirement and not have to rely on the vagaries of the stock market.
The link with retail prices introduced by the Government in 1980 is a double con. It is a con because retail prices have risen less quickly than earnings, but it is a double con because research shows that the index for pensioners is considerably different from the price index for the rest of the population. For example, in the third quarter of 1991 the Government told us that retail prices for all items increased by 4·8 per cent. However, the

increase in prices paid by pensioner households, who tend to spend more on fuel and other such items, was 7·2 per cent. That is not reflected in the state old-age pension.
In other words, if we add up all the money that has been stolen from pensioners in the past 12 years, we find an annual theft of more than £5 billion from pensioner households. That has been handed out in tax relief to the very rich in our society. That is a measure of the contempt in which the Government hold those who served the community so well during their working life.
Likewise, the change in the system of the state earnings-related pension scheme has taken £2 billion from Government income. Again, that is money which has gone into the private sector. We want an understanding that people who have worked during their lives, be it in their home, their factory or wherever, deserve to be paid a decent state pension during retirement. [Interruption.] If that is more than Conservative Members can cope with, they are welcome to leave.
My Bill makes eight proposals in all. They are straightforward and simple. The first is an immediate restoration of the link between the state old-age pension and average earnings, which was broken in 1980. That will restore the money that has been stolen from pensioners in the past 12 years. The second is that, during the lifetime of a Parliament, we should make the state old-age pension half average earnings for a couple and a third for a single pensioner. That would be a considerable increase and would bring us roughly in line with the average rate of old-age pension in comparable industrial economies around the world.
If other countries can pay such levels of pension, it can be done in Britain. [Interruption.] Conservative Members may call out, "Where will the money come from?" I can think of an awful lot of sources. First, we could restore a fair system of taxation to replace the unfair system from which the rich have gained more than £25 billion in tax handouts in the past 12 years. The £24 billion-a-year arms bill would also be a useful source of money to increase the standard of living of old-age pensioners.
The third proposal is to ensure serious co-ordination of Government policy as it affects pensioners. There should be a Minister whose job is to co-ordinate that policy, because pensioners require not only a decent level of state old-age pension, but access to luncheon clubs and day centres. They require home carers, a decent health service, a decent transport service and access to facilities such as libraries and adult education. Retirement should not be the end of life. It should be a period of enjoyment and development, not the misery of worrying about how one is to make ends meet.
The fourth and fifth proposals of the Bill are that every health authority should be required to make a public annual report on what facilities it makes available to pensioner households within its district. I often feel that the health needs of pensioners, whether for chiropody services, stress clinics or other special services that pensioners might need, are often forgotten because pensioners are not so able and articulate a lobby as some of the more professional groups who represent the better-off in our community. Such a report would at least analyse what facilities were available. It would also analyse the causes of death and rates of death through hypothermia and all the other injustices that occur in our society.
My fifth proposal is that local authorities should likewise be required to produce an annual report on the services they provide for the elderly. It would show that, increasingly in the past few years, local authorities have sought to charge for home carers who come into pensioners' homes. They have done so because they have had to make financial cuts.
Local authorities have had to restrict library opening hours, cut the numbers going to luncheon clubs and cut adult education and many social facilities, including such crucial things as holidays.
An annual report would not solve all those problems, but at least it would force local authorities to recognise the importance of their services to pensioner households.
The sixth proposal will find general favour. It is generally recognised that a poll tax is an unfair form of taxation, and that is why the Government are abolishing it. The imposition of standing charges for gas, electricity, telephone, water, and television licences is unfair on pensioner households. I propose that they should be abolished so that such households would pay less for gas and electricity. There would be an absolute prohibition on the disconnection of services to those households. Last year, 370 deaths were recorded as a result of hypothermia. I think that that was an understatement of the case, because many coroners and doctors are reluctant to put hypothermia as the cause on death certificates.
My hon. Friend the Member for Walsall, North (Mr. Winnick) tried to introduce the seventh proposal early in 1987, but it was tragically defeated when the Government brought in the payroll vote. Its aim was to provide free television licences for pensioners. Television is normal, and I do not understand why pensioners should be expected to pay for such licences.
The final proposal is on concessionary fares and free-fare schemes. London pensioners enjoy free fares because the Greater London council introduced that scheme, and even this Government have been forced to maintain the system. I propose that such a scheme should be introduced throughout the country.
The Bill will dramatically improve the lot of pensioners, and I look forward to the support of the House.

Question put and agreed to.

Bill ordered to be brought in by Mr. Jeremy Corbyn, Mr. Dennis Skinner, Mr. Harry Barnes, Mr. David Winnick, Mr. Harry Cohen, Mr. Tony Benn, Mr. Dave Nellist, Mrs. Audrey Wise, Mrs. Alice Mahon, Ms. Dawn Primarolo, Mr. Tony Banks and Mr. Bernie Grant.

ELIMINATION OF POVERTY IN RETIREMENT

Mr. Jeremy Corbyn accordingly presented a Bill to require local authorities and health authorities to monitor the condition of their retired population; to eliminate standing charges on gas, electricity and water; to exempt pensioners from licence charges and telephone rental; to extend pensioners' concessionary fare schemes to make provision for the calculation of old age pensions by reference to average earnings; and to appoint a Minister with responsibility for retired people: And the same was read the First time; and ordered to be read a Second time upon Friday next and to be printed. [Bill 93].

Inflation

Mr. Speaker: I have selected the amendment in the name of the Leader of the Opposition. Although I do not propose to put a 10-minute limit on speeches, I hope that hon. Members who are called early in the debate will set a good example by speaking for not more than 10 minutes; then all hon. Members who wish to participate will be called.

The Chief Secretary to the Treasury (Mr. David Mellor): I beg to move,
That this House congratulates the Government on its prudent economic policies, which have led to a substantial reduction in inflation; notes that the level of inflation in the United Kingdom has been half that under the previous Government, is now below the average for the European Community and close to the level in Germany; notes further that low inflation is essential to a sustained recovery in output and employment; and draws attention to the policies of Her Majesty's Opposition, which would inevitably lead to higher inflation, higher interest rates and higher unemployment.
If anyone wants to know what a Labour Government would be like, the last 10 minutes were an entertaining trailer. It should have come with a Government health warning.
The control of inflation is the cornerstone of Government economic policy. It is not some dogmatic genuflection to an empty shrine, but absolutely central to the prosperity of our country. What is at stake when one debates inflation is fundamental. I cannot improve on the formulation of Sir Brian Corby, the president of the Confederation of British Industry in a speech towards the end of last year. Speaking about what is at stake, he said:
We have a genuine prospect of a stable economic climate based on low inflation in the 1990s. We should not be complacent about it. Our success will hinge on squeezing out the pervasive inflationary psychology at all levels of the economy and society.
In advocating the control of inflation, one is advocating a priority not for Government but for business, and a priority to which all business organisations subscribe. It is a sensible priority for the individual and for people on fixed incomes whose savings were ravaged by inflation in the 1970s. It is a priority for every family in the country, as one statistic drawn from the 1970s can prove. During the lifetime of the last Labour Government, money wages doubled, but the real take-home pay of the average family did not increase at all as a result of the pernicious combination of high inflation and high taxation. There is no reason to think that the combination would be any different under a future Labour Government.

Mr. Frank Haynes: What about unemployment?

Mr. Speaker: Order. I am sure that the hon. Member for Ashfield (Mr. Haynes) will agree that Whips should give a lead in good behaviour.

Mr. Mellor: It is rather an honour to be barracked by the oldest hooligan in the business.

Mr. Dave Nellist: One of the classic definitions of the cause of inflation is that it occurs when too much money is chasing too few goods. Does the right hon. and learned Gentleman recognise that the danger for the 1990s is that the fall in production, especially in manufacturing, and the fall of almost 35 per


cent. in two successive years in fixed capital formation, could mean that inflation could return, not because people are being paid too much but because his Government and their policies are destroying the productive side of the economy?

Mr. Mellor: Far from it. The very people who manufacture implore the Government and would implore a Labour Government, if there were to be one, to create a stable price environment in which they can compete. The record shows a 5 per cent. increase in exports to the European Community over the past 12 months. Even in 1991, a year of recession, our share of world trade in manufactures increased for the third year running. That shows what manufacturers can do in a stable environment.
I stress again that the argument for the control of inflation is fundamental to all that organised British business says when it speaks and makes representations to the Government. The cost to business of getting it wrong is enormous. In a speech a few months ago, Sir John Banham said:
We must redouble our efforts to squeeze inflation out of our economy, which costs business some £5 billion for each percentage point every year.
That is the cost to business of getting the decisions wrong.
It is a sign of success, a sign that we have the climate for recovery in this country, that inflation has fallen sharply to stand this month at 4·1 per cent., which is within a tenth of a percentage point of German rates. I am always keen to encourage the active participation of Opposition Members. Can any of them say at what time during the term of the last Labour Government inflation was within a tenth of a percentage point of German rates?
There can be no answer, because, in 1975, inflation in Britain was 24·2 per cent. and in Germany it was 5·9 per cent. In 1976, inflation in Britain was 16·5 per cent. and in Germany it was ·3 per cent. The figures for 1977 are 15·8 per cent. in Britain and 3·8 per cent. in Germany. Even after the beneficial impact of the International Monetary Fund, the figures in 1978 were 8·3 per cent. in Britain and 2·6 per cent. in Germany.
Today this country has a competitive climate that did not exist and never looked like existing when Labour was in office. Our inflation rate is now almost 1 per cent. lbelow the European Community average. Producer prices on the best measure— that is, manufacturing output excluding food, drink and tobacco—are 3·1 per cent., the lowest for a quarter of a century. Indeed, the three-month on three-month rate of producer prices is down to an annual rate of 2·2 per cent.
In other words, an era of stable prices against which British industry can perform and out-perform the best in Europe and in the world is available to us. We have a low-strike economy in which people can have sensible wage increases and which can deliver low inflation and a real increase in living standards—rather than funny money chasing massively inflated prices, as happened in the 1970s. That is the difference between the record of this Government and the alternative offered by the Labour party.

Mr. David Winnick: If we are in the competitive state that the right hon. and learned Gentleman claims, why is it that Britain is now in the second major recession since the Government took office in 1979? Why have tens of thousands of small businesses in the west midlands and elsewhere collapsed in recent

times? Why is there such an economic climate that the Government, understandably, have been reluctant to go to the country? When will the Government tell us when unemployment will fall—or will we have to wait until 9 April to elect a Government who will be determined to restore full employment?

Mr. Mellor: In what appears to be the hon. Gentleman's new conversion to the market economy, he must know that there are cycles. He also knows that the key question is who best provides the right climate for recovery. He knows that there are now many more businesses in Britain than there were in 1979. Before the hon. Gentleman, in his inimitable way, reduces this to the lowest common denominator of debate, can he tell us what he would be saying if he were a member of Congress?

Mr. Giles Radice: rose—

Mr. Mellor: I note that the hon. Gentleman has been joined by the public school tendency. It is a pernicious combination that is beginning to make me fearful. What would an economic debate be without an intervention from the hon. Gentleman? It is Don Quixote without Sancho Panza.

Mr. Radice: If the battle against inflation is so important, why have we had to win it twice?

Mr. Mellor: If I were the hon. Gentleman's parent, I would be terribly worried about having spent all that money on his education simply to have him raise points like that. I never had that much spent on my education, but I can answer the hon. Gentleman.

Mr. Radice: Answer, then.

Mr. Mellor: I am about to do so.
The average level of inflation in Britain in the 1980s was 6·5 per cent., and in the 1970s it was 13·7 per cent. The increase in inflation to a peak of 10 per cent. two years ago was nothing compared with the record of 25 per cent. under the previous Labour Government, when the hon. Gentleman complacently sat on his bottom and supported them through thick and thin. If he wants to know about records, I am happy to compare them. To quote the 1970s actually flatters the Labour party, because its record of 13·7 per cent. degrades to 15·5 per cent. if only the Labour years are counted.
Let us return to the example of Germany—traditionally the strongest economy in Europe. In the 1970s, the average differential between our inflation rate and Germany's was 8·6 per cent. Under this Government, that has been cut to within one tenth of a percentage point. In the 1970s, our inflation rate was more than 4 percentage points worse that that of France, 3 percentage points worse than the European Community average and only 0·3 percentage points better than that of Italy. In the 1980s, we were 0·2 percentage points better than France, 0·3 percentage points better than the European average and 3·3 percentage points better than Italy.
If we are an exporting nation—surely we can agree with Opposition Members on that at least—it must be acknowledged that the climate for exports is enormously improved as a result of that reduction in inflation. The buoyancy of British exports to the European Community, which have increased sharply in volume and value even in the last three years, is a classic example of the improvements that have occurred.

Mr. A. J. Beith: Does not the Chief Secretary acknowledge that the greatest reduction in inflation has taken place at a time of deep recession? If recovery arrives, how does he expect that inflation will be controlled? Does the right hon. and learned Gentleman hope that, by that time, the United Kingdom will be a member of a single currency union—recovery may well take that long—and that it will then be controlled by an independent European central bank?

Mr. Mellor: There is no reason to believe that the policies that have brought a reduction in inflation to levels that could not have been countenanced in the 1970s will not continue to provide a stable basis for prices ahead. That is not just the Government's case but what others say. Professor MacWilliams of the Confederation of British Industry said in his new year message:
An end to uncertainty about economic policy would come if the election gives a mandate for a free-market, low-inflation economy, which would help boost business and financial confidence and unblock delayed investment decisions in the second half of 1992. Clearly, though, a change in Government would prolong the uncertainty.
Professor MacWilliams said also:
Perhaps the best news for 1992 is the prospect of low inflation, which may hit 3 per cent. and stay close to that level. Pay settlements down to half the level of a year ago and productivity growth rising to 6 per cent. make this sustainable.
That is the climate for recovery and low inflation. I do not know that that is on offer from either of the main Opposition parties.

Mr. Tim Smith: Will my right hon. and learned Friend confirm that we must go back to the Macmillan Government of the 1950s to find a full year in which Britain last had stable prices? Given the good news about inflation that my right hon. and learned Friend gave the House this afternoon, does he agree that, if we stick within the disciplines of the exchange rate mechanism, stable prices could once again be within sight?

Mr. Mellor: I am sure that stable prices are more in sight now than they have been for a long time—and they will remain so, if there is adherence to the policies that brought them about.
The reaction of Labour Members has been to snipe and to sneer or to hold conversations among themselves when inflation is debated. For instance, I could not help tuning in the other evening, on 13 February, to "The World Tonight", on which it was put to the hon. Member for Dunfermline, East (Mr. Brown) that inflation had sharply improved. He replied:
That's not true. Inflation has risen in the last two months, and it is something that this Government has failed to deal with adequately.
The following day, inflation fell from 4·5 per cent. to 4·1 per cent.
It is astonishing that the hon. Member for Dunfermline, East and Labour as a whole believe that there is a point to be made about marginal variations in inflation of well under one percentage point, against Labour's record. That is a desperate attempt to discredit our achievements. They will be telling us next that low inflation poses a wicked and evil threat to those on index-linked pensions.

Mr. Paul Flynn: We are always keen to give the Government credit for what they have done. Did the Chief Secretary see Sir Alan Walters's appearance

on television about the same time? He was asked to give his reasons for the recession and to apportion blame. He said that it was due 30 per cent. to the world recession and 70 per cent. to the Government's irresponsible mismanagement of the economy. Does the right hon. and learned Gentleman agree?

Mr. Mellor: Is Professor Walters now an adviser to the Labour party? To what other views of his does Labour adhere? I will not join the ancient arguments between Professor Walters and one or two others with whom he disagrees. Chancellor Kohl, after three sucessive quarters in which Germany's gross domestic product has fallen, does not think that the recession was made in Downing street—and it was not much use to President Bush to suggest such a thing in the New Hampshire primary. We ought to be having a sensible debate about how Britain should move towards recovery.
It will not have escaped the hon. Gentleman's notice that the London business school recently forecast a growth of nearly 2 per cent. in the British economy this year, and I suspect that other forecasts will point clearly to a recovery this year. The question that Labour must answer, rather than making silly debating points, is what Labour policy would do to inhibit such a recovery from taking place.

Mr. Jimmy Wray: Will the Chief Secretary give way?

Mr. Mellor: No, I am going to push on.
I am glad that the Leader of the Opposition is with us. Although I do not suppose that a greater torrent of words has ever been unleashed in the history of human civilisation than by the right hon. Gentleman, it is not easy to find much that he has had to say on the subject of inflation. I have had his conference speeches from 1983 analysed—I could not bear to read them all myself. Is it not interesting that, while everyone agrees that the fundamental issue for the British economy is inflation—[Interruption.] Labour Members become worried as soon as the Leader of the Opposition is mentioned.

Mr. Bruce Grocott: On a point of order, Mr. Speaker. I am sure that you agree that it would be a gross constitutional impropriety if the researches mentioned by the Chief Secretary were carried out by civil servants and paid for by the taxpayer. Will the Chief Secretary take this opportunity of confirming that all the studies were carried out by Conservative central office—paid for, presumably, by business men overseas, and not by the taxpayer?

Mr. Speaker: It is not a matter for me, but I did not hear the Chief Secretary say that.

Mr. Mellor: I assure the hon. Gentleman that that is the case. I trust that the use of photocopying facilities in the House by the Labour party is equally subject to his scrutiny, given that he is so censorious.
Let us come to the point. It is beyond denial that the most fundamentally important factor for the success of British industry is low inflation; yet, in his party conference speeches between 1983 and 1988, the Leader of the Opposition did not mention the word "inflation" once. Between 1989 and 1991, he mentioned it only in the context of cheap debating points about the Government's record. Nary a word—[Interruption.] I am glad that the


Leader of the Opposition is in such a good mood. Perhaps he is in a good enough mood to remember the occasion when, in answer to a question about how Labour would tackle inflation, he told The Evening Standard—it was published on 26 May 1989—
To cut a long story short, we don't know.
I am sure that an offence against the Trade Descriptions Act has been committed here. When did the right hon. Gentleman ever cut a long story short?
The information that Labour has no policy on inflation, however, did not constitute a breach of the Official Secrets Act; that has been well known for some time. Lest Labour Members consider this a subject for amusement, and merely a Tory point, let me add that Labour's supporters have been equally nervous about its inability to come up with a sensible and comprehensive policy on inflation.
What about Mr. Ian Aitken, as Labour-inclined a journalist as can be found in this place? Everyone has heard of him. We usually hear hon. Members ask, "Who?" at this point, but no one has done so on this occasion, so I must be talking about someone who is well known to all Opposition Members. In December, Mr. Aitken referred to
a comprehensive economic policy, capable of answering one very simple question—'what would you do about inflation?' There is, in short, a void at the heart of Labour's economic policy".
What is the answer to that question—posed 15 months ago in The Guardian, which is read by most right hon. and hon. Members opposite?
When is the answer going to come? Does the Labour party seriously think that it will be able to get through the election without providing an answer? The Labour party has had years to think about it. There is going to be a frantic scramble to produce a document before the election. That is not in keeping with the Labour party's reputation as a solid group of citizens who are only too ready to show the public how much they have changed and how ready they are for the burdens of office.
It is perfectly obvious, when one looks at what Labour has said about inflation, that it does not understand it in the slightest degree. The Labour party thinks that the battle against inflation has been the cause of the nation's problems rather than the sine qua non of resolving them. It has opposed every measure that has brought inflation down, and it shows genuine resentment at the success of our policy to do so. It is apparent that the Leader of the Opposition was only too happy, in his days as a wild opponent of what the Government were doing, to stoke up rather than reverse the inflation of the 1970s. He was a particularly wild opponent of the International Monetary Fund and of the measures that were taken to bring control to the British economy.

Mr. Grocott: Will the Minister give way?

Mr. Mellor: No. The hon. Gentleman has blown it with a phoney point of order. I cannot believe that his IQ has increased markedly in the last 10 minutes.

Mr. Grocott: Will the right hon. and learned Member give way?

Mr. Mellor: No. I have already said that I do not intend to give way to the hon. Gentleman under any circumstances whatsoever.

Mr. Grocott: rose—

Mr. Speaker: Order. Does the Minister intend to give way?

Mr. Mellor: No.

Mr. Speaker: If the Minister does not give way, the hon. Member for The Wrekin (Mr. Grocott) must resume his seat.

Mr. Mellor: The hon. Gentleman had his chance to exercise his larynx and he abused it, so as far as I am concerned that is it.

Mr. Haynes: Will the Minister give way? Mr. Mellor: Very well.

Mr. Haynes: Will the Minister now compare the unemployment figures of the 1990s with those of the 1970s and 1980s? Will he also compare the crime figures of the 1990s with those of the 1970s and 1980s? He was in the Home Office when they were rocketing. The right hon. and learned Gentleman made particular reference to inflation and to the comparisons that could be drawn. How about unemployment and crime that I am now asking him to compare?

Mr. Mellor: rose—

Mr. Haynes: Wait a minute; I have not finished yet. The Minister will be aware that I shall be leaving this Chamber —[HON. MEMBERS: "Oh!"]—to go upstairs to a Committee to do some work there. I am glad that the Minister has given way to me, but instead of me walking out he will be kicked out.

Mr. Mellor: I do not sense that Opposition Front-Bench Members think that the Labour party is going to make a gain in Putney. It has not done very well there for 13 years.

Mr. Grocott: rose—

Mr. Speaker: Order.

Mr. Grocott: The Minister is being selective in giving way.

Mr. Speaker: Order. The Minister may have been selective but he does not intend to give way. Let us get on quietly.

Mr. Mellor: I intend to deal with the point made by the hon. Member for Ashfield (Mr. Haynes).

Mr. Haynes: Two points.

Mr. Mellor: All right, two points. The first one is that, under the last Labour Government, unemployment doubled. [Laughter.] Oh, yes, it did, and it was not a laughing matter. The other point is that the only sensible comparisons are contemporary experience in other countries. Germany has the highest unemployment rate since the Weimar republic. Yesterday, General Motors declared 74,000 redundancies in the United States, and unemployment in France has consistently been higher than unemployment in the United Kingdom during the last five years.

Mr. Haynes: What about the crime figures? Will the Minister say something about them?

Mr. Mellor: No. I have left the Home Office, so I do not intend to deal with the crime figures—not that there is not an answer.
It is wrong to lay all the blame for Labour's inability to mount a coherent policy on inflation on the Leader of the Opposition. That is, after all, why he has a shadow Chancellor. If one looks back at the uncomfortable week—

Mr. John Smith: Will the Minister give way?

Mr. Mellor: If the right hon. and learned Gentleman can contain himself, I am about to come to him. [Interruption.] The Chancellor is working on the Budget. He has got something substantial to do, as one would expect. The privilege of listening to me is afforded to the right hon. and learned Gentleman. If he did so, I would sit down much more quickly. He did not have a very good week last week. We learned that some of the natives are getting restless with his supposed moderation, which is not delivering the goods. One minute he is the monarch of the glens; the next some of his colleagues are itching for Scottish devolution so that he can become an immigration officer on one of the less salubrious parts of Hadrian's wall.
The surprising thing is not that the right hon. and learned Gentleman was criticised last week, but how he has escaped criticism for so long, when one considers how long the Labour party has had to come to terms with inflation and how persistently difficult, irresponsible and wrong the right hon. and learned Gentleman has been about the issue. For instance, he always advocates taking the easy way out, the 1 per cent. reduction in interest rates whenever the subject comes up, or investment and training as the answer to everything.
It is what one might call the policy of the parrot house—"One per cent. off, pretty polly, pretty polly"; or, "Investment and training, quack quack, quack quack." Where lies the substance behind the solutions that the right hon. and learned Gentleman suggests? When will we have from the Opposition a coherent policy on inflation? [Interruption.] I am under the illusion that I am in the Cabinet; certainly I have a strong conviction that Opposition Members will not be.

Mr. Grocott: rose—

Mr. Mellor: I am fed up with the hon. Gentleman. I am not giving way to him, come hell or high water. I have already made that clear.

Mr. Grocott: rose—

Mr. Mellor: He has had his chance, and it is becoming disruptive.

Mr. Grocott: rose—

Mr. Mellor: The hon. Gentleman made a bogus point of order and he is now trying to disrupt my speech. I have told him that I am not giving way. If he wishes to try to catch your eye later, Mr. Deputy Speaker, he may do so.

Sir Ian Stewart: When my right hon. and learned Friend was suggesting that the right hon. and learned Member for Monklands, East (Mr. Smith), the shadow Chancellor, had had a bad week last week, had he noticed that the right hon. and learned Gentleman has not even been allowed to sign the Opposition amendment?

Mr. Mellor: In the Kremlin, that was usually a bad sign. I do not know what the position is in the Labour party. Perhaps we shall be told. Watch this space, literally and metaphorically.

Mr. Wray: rose—

Mr. Mellor: No, I am pushing on. However, I note the hon. Gentleman's application for the right hon. and learned Gentleman's job.
In 1987–88, when, as we now know, interest rates were almost certainly too low, both the Leader of the Opposition and the right hon. and learned Member for Monklands, East were calling in the most intemperate terms for interest rates to be further reduced. The fact is that the Labour party subscribed to a range of policies directly designed to put inflation up.
Let us take its minimum wage policy. It is guaranteed to put up inflation and costs. The other day, the Daily Express did a survey of 30 companies, only two of which thought that they could cope with the minimum wage without it sharply affecting their business, costs and prices. There is a problem with the Opposition. They become boring and predictable. I thought to myself that the very mention of the Daily Express would have the Opposition cackling and falling about.
The most prominent company mentioned in the Daily Express survey was Grand Metropolitan plc, a reputable, substantial British company, employing thousands and thousands of people, many of them constituents of Opposition Members. So I got in touch with Grand Met to see whether it had been traduced by the Daily Express. On only one example of its activities, the managed pub business, Grand Met has costed the combined impact of the minimum wage and atypical workers' directives at £15 million a year.
That is the reality of the impact of the minimum wage. [Interruption.] Ah, we have the derisive laugh now. One can always tell when Labour is getting desperate. The hon. Member for Newcastle upon Tyne, East (Mr. Brown) starts laughing unconvincingly. It is not very funny. I dare say that some of those pubs are in his constituency, and that some of his constituents drink in them. They will find the price of their beer going up as a result of the Labour party's nonsense.

Mr. Grocott: The right hon. Member for Hertfordshire, North (Sir I. Stewart) was concerned about who signed the amendment in the absence of my right hon. and learned Friend the Member for Monklands, East (Mr. Smith). Is it in order for the Chief Secretary to speak in support of the Government motion when he has not signed it?

Mr. Deputy Speaker (Sir Paul Dean): If it were not in order, he would not have been called.

Mr. Mellor: I am still here, as active as I am capable of being.
The debate needs to be about whether the Labour party will be capable of sustaining stable prices within the United Kingdom economy, which we know to be a fundamental basis for the economic and commercial revival of Britain in the 1990s. We know that it cannot do so. We know that the Labour party's interest rate policy is confined to saying, "One per cent. off."
I hope that I can have the attention of the right hon. and learned Member for Monklands, East, at least for the next bit of my speech. If he were ever to achieve office, he


would have to be preoccupied with this, and it might he helpful if he were aware of it now. The Labour party is the party of devaluation. The currency went down by 4 per cent. for every year of the last Labour Government. The right hon. and learned Gentleman has been alert to the need to make it clear that that would not happen under a Labour Government. He says, "We would not devalue." There is also his passionate attachment to the exchange rate mechanism, a policy which some of his hon. Friends find chafes a bit. Immediately, there is the prospect of trouble from Labour Back Benchers. During the debate on the economy last week, there were eight speakers from the Labour Back Benches. Four of them advocated devaluation or are exponents of it.
Unlike some of his hon. Friends, I am prepared to accept that the right hon. and learned Member for Monklands, East would not want to devalue the currency. So what premium would a Labour Government be prepared to pay to prove to the international markets that they would not devalue? [Interruption.] Despite all his Winchester erudition, the hon. Member for Durham, North (Mr. Radice) has missed a fundamental point. We have nothing to prove. Every other country in the ERM had to put up its interest rates over Christmas in the wake of an increase in German rates. We were the only country that did not have to do so.
If the hon. Member for Durham, North doubts that I am making a serious point, perhaps he will believe some of his old school chums from some of the firms in the City. Nature abhors a vacuum, so, because the Labour party will not tell us what premium it would be prepared to pay in order to show that it would defend the value of the currency, the City has been doing the work for it. I shall read out the list that we have obtained.
The DKB bank said that interest rates would be 2 per cent. higher, Nomura said that they would be 2 per cent. higher, Credit Lyonnais said that they could be up to 4 per cent. higher, Kleinwort Benson said 2 per cent. to 4 per cent. higher, the London business school said up to 3 per cent. higher, James Capel said 1 per cent. higher, UBS Phillips and Drew and Midland Montagu said that they would go up.
The Leader of the Opposition knows well Mr. Gavyn Davies of Goldman Sachs. I think that his wife is still employed by the Leader of the Opposition, and he was an adviser. Yet Goldman Sachs says that interest rates would go up. The Confederation of British Industry said that interest rates would go up, BZW said that they would be 1 per cent. higher, London Economics says that they would be 2·5 per cent. higher and the Halifax says that they would go up. That is the reality facing the British people, but the Labour party will not admit it. The price of a Labour Government would be an immediate hike in interest rates, with all the damage that that would cause. That is what the Labour party will have to answer.
The Labour party does not see the ERM as a serious policy commitment: it sees it as a further way of evading the responsibilities of government. The right hon. and learned Member for Monklands, East fails to understand that ERM membership is a commitment to pursue responsible fiscal and monetary policies, not a substitute for them.
There is no better example of sustained irresponsibility than the refusal of the right hon. and learned Gentleman and the Leader of the Opposition to appreciate the impact on foreign exchange markets and international confidence

of calls for reduced interest rates. Labour has had it too easy. It certainly would not have it easy if it were in office, but nor would the rest of us.
The other point that the Labour party must come to terms with is the damage to its reputation done by its failure to control inflation. UBS Phillips and Drew said:
Labour's image is still tarnished by the rampant inflation of the late 70s. Though memories fade, Labour must impress an electorate sceptical about its ability to manage the economy.

Mr. David Clelland: Will the Chief Secretary give way?

Mr. Mellor: No, I am pushing on now. I have given way a lot.
City analysts have been asking what would be the impact of a Labour Government on inflation. The right hon. and learned Member for Monklands, East is now engaged in conversation with the hon. Member for Derby, South (Mrs. Beckett). This is worth listening to, because it is not Tory propaganda but what the financial community, who would judge a Labour Government, think Labour is likely to do.
Nine forecasts were made recently. Economists normally do not agree on anything, but this is so clear-cut that they all said that inflation would be higher under a Labour Government. The average is 2·3 per cent. higher in year two, 3·4 per cent. higher in year three and 3·8 per cent. higher in year four. No wonder the Financial Times reports that 87 per cent. of fund managers thought that Labour would not be able to control inflation and only 3 per cent. thought that it would.
The Labour party seems to want to be wilfully blind to this. Returning to things in Putney, we received "Labour News"—"News from Labour in Putney"—I presume that it is pushed through many other doors—which quotes City analysts and says:
Experts believe that Labour's policies for investment in research and training will make Britain stronger and more prosperous. Labour will build a world class economy.
It does not say which part of the world it has in mind, of course
I should be interested to know what City analysts Labour relies on. It seems to recall that happy old American jibe that the only support that the Labour party is getting for its policies from City analysts is the support that the rope gives the hanged man.

Mr. Peter Hain: rose—

Mr. Mellor: Here is an expert on Putney—he lost two elections there.

Mr. Hain: Indeed, but the Chief Secretary will lose to the author of that pamphlet at the next general election.
We have heard a typically juvenile speech from the right hon. and learned Gentleman. We have record mortgage repossessions, businesses and investment and output collapsing, and the economy going down the drain, but all that the right hon. and learned Gentleman can treat us to is a series of comic turns and cheap jibes. When will he give his policies for getting us out of the economic mess that he and his colleagues have created?

Mr. Mellor: It is a bit rich to be accused of juvenilia by the Peter Pan of student activists.
What has been revealed this afternoon is a formidable case for the Labour party to answer—a formidable case that says that Labour has no policies to control inflation,


that it would be unable to control inflation, that inflation would increase to double its present level and that interest rates would have to rise as a consequence of a Labour Government.
People thought that Labour's tax plans were bad enough. When we learned about its tax plans, they thought that the cat had got out of the bag. This afternoon, we have provided the reason why the cat got out of Labour's bag—it did not like what was left in it, still waiting to come out. We are now beginning to know.
As such an array of talent is assembled on the Labour Front Bench, may I pose another question about some of the matters with which we have been dealing this year? We have shone a spotlight on Labour's tax and spending plans, and such is the chaos that the Labour party has had to burn the midnight oil to produce a document trying to reconcile them—the self-inflicted wound of proclaiming its new-found ability to manage the economy competently by having limited spending plans properly costed and carried into effect on the back of tax increases which are themselves properly thought through. We saw how long that lasted—about three minutes—but we now hear about the so-called recovery package whose authors are all in front of me.
The hon. Member for Derby, South says that the package will cost £1 billion, that it is part of Beckett's law and will be introduced straight away, as did the right hon. and learned Member for Monklands, East. However, they neglected to tell the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). In one of his more memorable recent interviews—one does not necessarily expect the right hon. Gentleman to be well briefed, but I do not think that one required a lot of briefing to see what nonsense this is—he said that the recovery package would be paid for out of the recovery that it was supposed to bring about. I assume that that is not Labour party policy, and we shall assume that it is to be introduced straight away.

Mr. Kenneth Hind: Will my right hon. and learned Friend give way?

Mr. Mellor: No, I shall carry on, if I may.
We now find that the plot has thickened. We have had a thickened plot in two material respects, on which I shall conclude my remarks. First, the Leader of the Opposition said in an interview in the Financial Times—and it might nevertheless be so—that £800 million of the £1 billion package is to be spent on training. It has been put repeatedly to the right hon. and learned Member for Monklands, East that training is not a short-term measure and can certainly not be dignified with the title of a recovery package which will quickly turn the economy around. The right hon. and learned Gentleman can spare me rejecting that, because I had the privilege of turning on my television set at lunchtime to find him engaged in a sort of post-war altercation after last week's debate with my right hon. Friend the Secretary of State for the Environment who made this allegation. My right hon. Friend speaks very effectively, as the right hon. and learned Gentleman found to his cost last week.

Mr. John Smith: The Secretary of State's name is on the motion on the Order Paper, but the right hon. and learned Gentleman's is not.

Mr. Mellor: Now that the right hon. and learned Gentleman has got that off his chest, let him listen for a moment. I promise not to detain him for very long.
My right hon. Friend said that training was not a short-term measure, and the right hon. and learned Gentleman hopped up and down on television saying that indeed it was not.
I had great pleasure—and told the House about a great competition about Labour's priorities—in reading the document "Women Today", which turns out to be a Labour party brief. I hope that the hon. Member for Derby, South is concentrating, because I am about to quote her, or what somebody has ill advisedly put into her mouth. The hon. Lady features in the document under the bold headline "We'll put an end to the waste of money". She said:
We have a very tight series of priorities … we need early investment in education, in training, in industry—the things that will take a long time to show results.
What price the recovery package, the £1 billion bingo which will turn the British economy on straight away? It is inherently risible that a £1 billion package will turn on an economy of £600 billion. It is even more risible when four fifths of it is to be spent on training.
There is a second point on which I would welcome assistance from the Opposition. We want to know how the £800 million might be spent on training. I am aware of the fact that the Labour party has made a commitment which means—as usual, the Labour party has far more interest in trade unions than in some of those who might benefit from public expenditure—that every trainee must have a minimum wage. The cost—

Mrs. Margarat Beckett: indicated dissent.

Mr. Mellor: I am glad that the hon. Lady is going to correct that, because if Labour's pledge to give a minimum wage to the unemployed persons who go into training or the pledge involving young people who do youth training is honoured, £630 million of the £800 million would go on paying extra money to existing trainees in order to top them up.

Mr. Neil Kinnock: Pathetic!

Mr. Mellor: I did not invent this recovery package, and I would rather have spent my time dealing with more intelligent matters. It is the Opposition who are parading the recovery package. I ask: when is a recovery package not a recovery package? Answer: when it is a piece of nonsense like this one.
I hope that today we will discover something more concrete and more persuasive about the Labour party's policy on inflation. At the moment, Labour's economic policy is a bit like a haggis—for most people it is okay only as long as they do not think too much about what has gone into it. [HON. MEMBERS: "Disgraceful."] As usual, Scottish tails are wagging Labour's English dog. They may not be alert to matters of economic policy, but they are alert to my last point. I would be interested to know not only about the contents of a haggis but about the persuasive contents of Labour's anti-inflation policy. I think that we should be told: I hope that we will be told.

Mrs. Margaret Beckett: I beg to move, to leave out from "House" to the end of the Question, and to add instead thereof:
'believes that inflation, though reduced from levels to which Government policy raised it, has not been conquered, but merely suppressed by high interest rates and the recession they have created, at a cost of rising business failures, mortgage repossessions, and soaring unemployment; and recognising that low inflation is a necessary, but not a sufficient, condition for recovery, calls upon the Government to introduce measures which include support for investment in manufacturing industry and in training, since without such measures inflationary pressures will simply re-emerge.'.
There are two reasons why we are having today's debate in which the Government boast of today's inflation and interest rates, which are both certainly lower than they were a year ago. The first reason is clear: of what else could they boast—of soaring unemployment, soaring house repossessions, soaring bankruptcies, plummeting investment and negative growth? The Government would have some difficulty talking about any of those, so they do not.
The second reason for this debate is that the Government hope that if they talk enough about their concern for inflation the wish will be taken for the deed. They hope that we will all remember what they said about inflation—the history books are littered with stern words about it—and not what they actually did about it. The Government motion seeks to compare their record not only with that of the previous Labour Government but with that of the European Community, particularly Germany, claiming that inflation is now below the EC average and close to the rate in Germany.
For most of the Government's period in office the yearly average retail prices index has been above the EC average; the last time it fell below it, by a remarkable coincidence, was during and in the aftermath of the Government's first recession in the early 1980s. Only their second recession has again suppressed inflation to below the EC average, and only the strains of German reunification have brought German inflation to the level to which ours has been reduced by recession.
In any case it is only a few months since the Government were telling us that it was wrong to compare the retail prices index with EC inflation figures. We should, they said, use the underlying rate excluding mortgage costs. Of course, that rate does not show the same flattering picture.
The Government's main text, however, is undoubtedly the domestic record and circumstances of the last Labour Government and the record and circumstances of this Government. The Labour Government were elected in February 1974. They inherited the aftermath of the Barber boom—inflation at 13·1 per cent., a public sector borrowing requirement at 6 per cent. of GDP, and a quadrupling of oil prices, as well as rising world commodity prices and disadvantageous terms of trade.
The Labour Government tried to absorb the effects of the oil price rise without a major change of course. In consequence, as the right hon. and learned Member for Putney (Mr. Mellor) said in his speech, peak inflation rates of 26 per cent. were reached by 1975, together with an increase in the public sector borrowing requirement to a maximum of over 9 per cent. of GDP—but that, I repeat, was the maximum.
The major contributory factors to the peak inflation rate and the peak PSBR level were the levels of inherited inflation and inherited PSBR coupled with the oil price shock—

Mr. Tony Marlow: Will the hon. Gentleman give way?

Mrs. Beckett: No. This was at a time when Britain was a heavy net importer of oil.
By 1979 when Labour left office—[Interruption.]Conservative Members want to know about the record: let them listen to it then.
By 1979, when Labour left office, inflation was at 10·3 per cent.—

Mr. Alistair Burt: rose—

Mrs. Beckett: In a moment. That was lower than the level that we had inherited. Unemployment, at more than one million, was falling. Interest rates were at 12 per cent. having averaged 10·7 per cent. It is not only our view that the peak levels of inflation to which I have referred were something to do with what we inherited from the Conservative party—

Mr. Burt: rose—

Mrs. Beckett: In a moment. I am sure that the hon. Gentleman is anxious to hear the following quotation from the right hon. and learned Member for Surrey, East (Sir G. Howe), who said on 12 May 1981:
Monetary growth was allowed to accelerate rapidly in 1972 and 1973 under the impression that, now the fixed exchange rate discipline was gone, this was the way to increase output. By 1975, inflation, helped by the rise in the price of oil, had risen to 25 per cent.
The right hon. and learned Gentleman fairly made the point that the Labour Government's inheritance contributed to that level of inflation—

Mr. Burt: rose—

Mr. Marlow: rose—

Mr. Phillip Oppenheim: rose—

Mrs. Beckett: Not for a few more moments. Between 1974 and 1979 the PSBR fell again to 5 per cent. of GDP, lower not only than the peak but than the inherited figure.
Tory Members always talk about the record of the last Labour Government, so I repeat that, when we left office, inflation was lower than the figure that we inherited from the Conservatives, as was the PSBR. That Labour Government not only lowered inflation and the PSBR but achieved average growth of 2·2 per cent., more than the average in these recent years, and laid the foundations for the flow of revenues from the North sea which would amount to more than £100 billion in today's prices—a sum that shielded this Government for so long from the disastrous effects of their incompetence. These were the circumstances and the record of the last Labour Government, and now I shall give way.

Mr. Burt: The hon. Lady skipped conveniently from 1975 to 1979. What do the letters IMF mean to her?

Mrs. Beckett: They mean the International Monetary Fund to me; I am not sure what they mean to the hon. Gentleman, or what they have to do with the fact that inflation was lowered by the Labour Government, as was the PSBR.

Mr. Burt: rose—

Hon. Members: Give way!

Mrs. Beckett: No, once is enough.
I come now to what the Conservative party really wants to hear about—the record of the Conservative Government. Conservative Members are delighted with that record so they must be anxious to hear what it is—

Mr. Marlow: rose—

Mrs. Beckett: No, I shall not give way. The hon. Gentleman seemed incapable a few moments ago of distinguishing my sex, so I feel disinclined to give way to him. Perhaps he needs glasses.
In May 1979, this Government came to power. In their June 1979 Budget the Government raised VAT from 8 to 15 per cent. That alone added four percentage points to the retail prices index. In their Budget of June 1979 they reduced subsidies for prices such as those for gas and electricity, which added another 2·5 per cent. to the retail prices index. Interest rates in that same Budget were raised by 2 per cent. and peaked at 17 per cent. in November 1979. There were other factors which affected the rate of inflation, but these were within the Government's discretion. Earlier, the Chief Secretary quoted Sir Brian Corby on the rooting out of inflationary psychology applying to all levels of society, including the Government.
The VAT rise especially was made to pay for the pre-election promise to cut taxes on incomes, and it was made in the belief—[Interruption.] I will explain in the fullness of time, if hon. Members will be patient—and listen, of course. It was made with a belief in the magical properties of controlling the money supply—a process that seemed to be believed, at least by some, to ensure no increase in inflation, no matter what other policy changes were made.
It was small wonder that by May 1980 inflation had reached 21·9 per cent.—more than double the rate that the Conservative Government inherited—with at least 6 per cent. to 7 per cent. of that increase being inflationary own goals inflicted by the Government to allow them to cut taxes.

Mr. Marlow: Will the hon. Lady give way?

Mrs. Beckett: No.
The economy was forced into recession, unemployment soared to 3 million—a rate of 13·3 per cent., which was 7 per cent. higher than in 1979. We lost 20 per cent. of our manufacturing capacity. However, by 1983 and with the approach of a general election, those policies, a fall in the price of oil and other commodities, and the emergence of more favourable terms of trade all contributed to bringing inflation and interest rates down, although gross domestic product and manufacturing investment had been savaged and were both below the level inherited by this Government in 1979.

Mr. Quentin Davies: How is increasing the tax burden on savings income supposed to increase investment?

Mrs. Beckett: The hon. Gentleman knows perfectly well that our proposal for a charge on investment income above—[HON. MEMBERS: "A tax."] A charge. When the Conservatives put up national insurance contributions

from 6·5 per cent. to 9 per cent., was that a tax? Conservatives did not say that it was a tax. If a charge is a tax, so is that on national insurance contributions, which the Conservatives increased from 6·5 per cent. to 9 per cent. That was a tax increase.
I return to the question put by the hon. Member for Stamford and Spalding (Mr. Davies), as hon. Members clearly prefer me to deal with that point. We have made the point on many occasions in the House that the proposed charge will simply put people with investment incomes on individual investment holdings of probably well over £30,000 on the same basis as those who have similar sums of earned income. That seems to us to be fair and that is why we propose it.

Mr. Mellor: rose—

Mrs. Beckett: No, I shall not give way because I am in the middle of a point about inflation. I will come back to the right hon. and learned Gentleman.
In June 1983, the date of the general election, inflation was brought down by those methods to 3·7 per cent. and interest rates were 9·5 per cent. Within two years of the 1983 election, in June 1985—

Mr. Oppenheim: Will the hon. Lady give way?

Mrs. Beckett: No.

Mr. Oppenheim: Why not?

Mrs. Beckett: Because every time I give way to the hon. Gentleman he asks the same silly question. I am bored with it.

Mr. Oppenheim: I have a new question.

Mrs. Beckett: I do not believe it.
Within two years of the election, in June 1985, interest rates were back at 12 per cent. and inflation had doubled to 7 per cent. Once again, the pattern was emerging of increases in rates and water charges—within the Government's purview—and those increases were well above the rate of inflation. Again, by the time of the election in 1987, interest rates were down again to 9 per cent. and inflation was at 4·2 per cent. The Government were making claims. The Prime Minister himself wrote in the election campaign that year in the Huntingdon Post:
Inflation has gone. The economy is sound. Unemployment is falling.
People voted on that basis.
In October 1987, after the stock market crash, the Government took the step of cutting interest rates, which they now claim is almost their sole mistake in all these years. In the 1988 Budget, they claimed an economic miracle and cut taxes afresh to their present level. Flushed with money and rhetoric, companies and individuals went on a credit spree and the Government went on feeding inflation.
The Government went on cutting money for public sector housing and forcing councils to increase rents. They went on cutting transport subsidies and forcing up fares. They insisted on price increases for gas, which were followed by increases for water and electricity to fatten those industries for privatisation. They also made hikes in prescription and other charges, and they pushed up interest rates to 15 per cent. and kept them there for a year. With that, they pushed up mortgages, mortgage debt and


repossessions. They pushed up unemployment and business failures, yet still they went on with inflationary own goals.

Mr. Oppenheim: Will the hon. Lady give way?

Mrs. Beckett: I cannot resist finding out whether the hon. Gentleman really has thought of a new point. I give way.

Mr. Oppenheim: I thank the hon. Lady for her graciousness in giving way. As the hon. Lady is clearly wedded to the exchange rate mechanism, will she confirm that a future Labour Government, if such a Government should come to power, would raise interest rates to defend sterling within the ERM if necessary? Yes or no?

Mrs. Beckett: The hon. Gentleman knows perfectly well that we have long expressed the view that, if the exchange rate is properly managed, there is no need to take that step—[Interruption.] Let the hon. Gentleman put that question to his right hon. and learned Friend the Chief Secretary if he chooses.

Mr. Mellor: Is the hon. Lady aware that her answer is one of the most extraordinary cop-outs? She would not be able to hold office in the Treasury for 10 seconds unless she was prepared to improve on that.

Mrs. Beckett: The right hon. and learned Gentleman seems to have managed it.
The Government went on inflicting inflationary own goals.

Mr. Mellor: Will the hon. Lady give way?

Mrs. Beckett: No. Once is enough on that subject.
I have a cutting from the Financial Times of 12 May 1990 which makes the point admirably. The article says:
Hardly ever, outside wartime, can a government have done so much to push up the inflation rate in a single month as this administration has achieved in the April calculation of the General Index of Retail Prices.
The Government went on inflicting inflationary own goals and within two years of the 1987 general election interest rates were back at 15 per cent., inflation had doubled again to 8·3 per cent. on its way to its 10·9 per cent. peak and, once again, we were heading for recession with the then Chancellor, now the Prime Minister, saying only that if it was not hurting, it was not working.
In the Financial Times article an additional comment was made. Drawing on the inflationary own goals that the Government had inflicted in a short time, the writer points out that that contrasts oddly with the Budget speech by the then Chancellor, now the Prime Minister, in March when he set out the Government's economic policy objectives. The article says that the first objective
is to bring inflation down again.
The commentator then writes:
But perhaps that aim should have been more explicitly stated: to reduce inflation just before the next General Election."
This is a Jekyll and Hyde approach to inflation control. With the advent of an election and in the pre-election period, Dr. Jekyll takes over and everyone is very good about inflation. Once an election is safely over, within two years, Mr. Hyde is letting rip and we see the effects on inflation and on interest rates.
Conservative Members dislike that comparison so much because, sure enough, as today we approach yet another general election, interest rates are at 10·5 per cent.

and we are waiting, yet again, for the Chancellor to decide when it will be politically beneficial to the Conservative party, rather than when it will be most advantageous to the economy, to cut them—and inflation is around 4 per cent. again. On 16 February, The Sunday Times said:
Any fool can reduce inflation if he is prepared to lay the economy flat on its back.
Of course, we know the fools who have.
Growth was down in 1991 by 2·5 per cent., the worst fall in a calendar year since the great depression of the 1930s. Unemployment is at 2·6 million and on its way, most people forecast, to 3 million.

Mr. James Arbuthnot: Will the hon. Lady give way?

Mrs. Beckett: No. I know that hon. Members do not want this on the record, but I am determined to put it there.
Three thousand jobs have been lost every day since the Prime Minister got his new job; 75,500 homes were repossessed last year, 72 per cent. up on the year before; perhaps a million people are said by the building societies to be in serious mortgage debt, that is, up to two months in arrears; and 47,800 businesses went bankrupt in 1990, the highest on record and a 65 per cent. increase on the year before. Manufacturing investment has fallen by 14 per cent. and is predicted by the CBI to fall again this year by perhaps 6 per cent. in this quarter. Today's Chancellor calls all that a price well worth paying to suppress inflation, without even a syllable of apology for the incompetence and mismanagement that pushed it up.
We believe that it is vital to keep inflation low. That is one of the reasons why we urged the Government to join the exchange rate mechanism of the European monetary system. But while low inflation may be a necessary condition for economic success, it is by no means sufficient. Too much money chasing too few goods is the classic definition of inflation. The Government have relied solely on one side of that equation—the supply of money. They have ignored the supply of goods and services, leaving it all to the market. If we allow our productive capacity to be further reduced—and as people begin again to want to purchase goods and services—inflation is bound to rise again. Even in recession we have inflationary bottlenecks and skill shortages. What is the Government's response? It is to go on cutting Government support for training, for industry and for the regions and to ignore falling levels of investment.
Professor Brian Reading pointed out some time ago in his evidence to the Treasury Select Committee that
reducing demand through lower investment cuts inflation in the short run but increases inflation in the long run.

Mr. Beith: The hon. Lady has not yet made clear what a Labour Government's response would be if the circumstances that she has described were to take place. She has cast doubt on whether such a Government would even be prepared to take the steps necessary to defend Britain's position in the exchange rate mechanism. What would a Labour Government do if they were confronted with inflation rising at a time of recovery?

Mrs. Beckett: The hon. Gentleman is being ridiculous. He knows perfectly well that we have made it clear on the record and consistently that we would maintain the exchange rate. He aspires to be considered a senior


commentator on Treasury matters. He should know better than to cast doubt on the wish of any prospective Government to maintain the exchange rate.

Mr. Mellor: Will the hon. Lady give way?

Mrs. Beckett: Again?

Mr. Mellor: I shall make the same point that I made earlier to the hon. Lady. The way in which currency levels are managed is by interest rates. That is the way it is done throughout the ERM. I am astonished that the hon. Lady is not prepared to give the commitment that the Chancellor has always given—one cannot have a commitment to the ERM unless one does.

Mrs. Beckett: We have given a commitment that we will maintain the exchange rate. We have given it consistently and the right hon. and learned Gentleman knows that perfectly well.
We must maintain low inflation and stable conditions so that business can plan ahead, address the supply side failures and, above all, avoid inflationary own goals. What about the Government's own policy? What are they going to do? What can we learn from the motion? Not very much, actually. In the motion is the claim that Labour will inevitably increase inflation. The Government have doubled it three times in 13 years. In the motion is the claim that Labour will push up interest rates. Interest rates and mortgage rates have been pushed up between elections in each of the Government's terms of office. Interest rates under them have averaged 12·4 per cent. as opposed to 10·7 per cent. under the previous Labour Government, and mortgage rates have reached the highest levels on record.
In the motion the Government claim that Labour will increase unemployment. Unemployment is double the rate that we left—and climbing—even though the Government have changed the way it is counted 30 times. They claim that our policies to promote investment, research and development, and on inflation and education and to improve the transport infrastructure, to create the wealth to enable us better to fund our public services will not work here when they are working in every successful economy in the world. They claim that we alone cannot make what is best practice in Europe common practice here.

Mr. Ian Taylor: Will the hon. Lady give way?

Mrs. Beckett: I shall not give way. I am almost at the end of my speech.
What is the vision that the Conservative party offers to the people of Britain in the 1990s? "Look at our record over 13 years," they say. "Re-elect us," they say, "and we will do it all again." They say, "We will shove up interest rates again and double inflation again." To show that they really mean it, we have that felicitous statement from the Chancellor, "If we'd known how it would turn out, we wouldn't have done anything different." There could not be a better statement of their arrogance. Let it be their epitaph.

Sir Ian Stewart: The hon. Member for Derby, South (Mrs. Beckett) will live to regret the extraordinary performance that she has delivered to the House this afternoon. Instead of the clear commitment which she should give to the methods necessary to maintain sterling in the exchange rate mechanism, if there were a Labour Government, we have been answered by evasion and prevarication. When she was asked, by not only my right hon. and learned Friend the Chief Secretary to the Treasury but my hon. Friend the Member for Amber Valley (Mr. Oppenheim) and the hon. Member for Berwick-upon-Tweed (Mr. Beith), whether a Labour Government would defend sterling within the mechanism by the use of interest rates, she found every possible means of avoiding an answer. Unfortunately, that is not a casual lapse.
The Labour party's approach to inflation has been careful to avoid making any of the commitments necessary to justify its claim that it would maintain sterling within the permitted bands. That is one of the main reasons why all commentators and serious analysts who looked at the figures, policies, proposals and statements of the Labour party have concluded that inflation would be higher under a Labour Government. My right hon. and learned Friend the Chief Secretary quoted many commentators this afternoon. They may differ in the amount by which they think that inflation would increase or the amount by which they think interest rates would have to rise in order to gain control of inflation, but none of them disagrees with the basic proposition that inflation would be higher under a Labour Government. It is not difficult to see the reasons why.
It is the stated policy of the Labour party to increase public expenditure by an enormous amount, not just by £5 billion, £10 billion or £20 billion but by between £30 billion and £40 billion. I lose count because Labour Members frequently change their commitment and priorities, but the latest estimates are approaching £40 billion in annual terms. Of course, it is not possible for a party which is committed to those spending priorities to convince the markets or independent commentators and analysts that its approach to economic management and monetary policy is sound unless it is prepared to explain how it would finance it. On top of making public expenditure commitments, Labour Members have encouraged almost every inflationary wage claim that has been made by public sector employees; yet they expect to be able to hold down wage claims in the public sector—with all the consequences that such claims have on public expenditure —as soon as they come into office. It simply is not a credible approach.
Above all, the Labour party has not understood the practical implications of its extraordinary policy for a minimum wage. It does not seem to understand that a minimum wage would not only squeeze out jobs at the lower end of the scale and impose extra costs on employers who retain labour at higher wages but have a knock-on effect on differentials all the way up the scale.
If a person who earns 10 per cent. less than someone else receives a 10 per cent. wage increase under the minimum wage provisions, does the Labour party believe that other workers who previously had a 10 per cent. differential would calmly accept that without putting in a claim to maintain their differential? All economic analysis


of the minimum wage proposal has concluded that a minimum wage would achieve an astounding double: it would put up inflation and unemployment simultaneously.

Mr. Derek Enright: Will the right hon. Gentleman explain why a high wage economy such as that of West Germany, as it was then, was so successful, had such low inflation and had proper manufacturing jobs instead of some of the cheap-jack jobs that we have here at present?

Sir Ian Stewart: I can give two answers to the hon. Gentleman. The first is that in Germany a responsible financial and monetary policy has been pursued for many years. That is something which the Labour party seems unable to recognise as necessary for sound economic management. Secondly, we are not talking about the continuation of a wage system, with or without minimum wages; we are talking about the effects of introducing a minimum wage system. The effect would be not only to put up the cost to employers in respect of existing employees and deny the labour market to some of those who in current circumstances are able to enter it but to create an upward pressure on the wages of many people who earn wages slightly above those affected by the minimum wage proposals. That is difficult to quantify exactly, but it is unavoidable that the consequence of a minimum wage would be an increase in wage costs which would work a long way up the scale.
The Labour party has not begun to understand the implications of its proposal. It is not surprising, therefore, that it does not realise why its policies are so incompatible with the commitment to which it says that it adheres—keeping sterling within the exchange rate mechanism. If ever there were any credibility in the Labour party's protestations on that subject, it was blown apart this afternoon by the extraordinarily evasive answers given by the shadow Chief Secretary to the Treasury. I am sorry that she felt it beyond her to respond to a Conservative Member, but she might at least have responded to the hon. Member for Berwick-upon-Tweed when he asked, perfectly reasonably, how she could justify her party's commitment to the ERM if she was not prepared to will the means as well as the ends.

Mr. Marlow: My right hon. Friend is setting out some of the grave disadvantages of a Labour Government, if elected. But is not the immediate price that we would have to pay the fact that, fairly or unfairly, reasonably or unreasonably, the financial markets would not trust a Labour Government, as they do not now? In any circumstances, there would have to be a higher rate of interest under a Labour Government than under a Conservative Government. What effect would that have on the recovery? What effect would it have on those people who are already having difficulty paying their mortgage? Would not it have a devastating effect within two weeks, six weeks or two months of the election of a Labour Government?

Sir Ian Stewart: The impact would be both early and severe, as my hon. Friend rightly points out. That is another reason why I suspect that the Labour party's commitment to maintaining membership of the ERM, with sterling at the present level, is not sincere.
I suggest that if the Labour party wants to be taken seriously, it must look again at its contradictory policies.

It says that it has massive public expenditure priorities. It intends to introduce a minimum wage and take steps which would undoubtedly put upward pressure on inflation. At the same time it constantly avoids admitting that it would take any other steps necessary to deal with inflation or, indeed, to protect the exchange rate of sterling.
I suggest that the Labour party does one of two things: either it should scale down its public spending commitments to a credible level and drop its proposal for a minimum wage or it should admit that it is not committed to the ERM. So long as it continues to try to have it both ways, it will not be believed on either of those commitments. The reason why the Labour party is not believed on its commitment to the ERM is simply that the rest of its economic policies are clearly incompatible with that commitment. So it should clear up the mess.
I do not know whether the hon. Member for Derby, South let out of the bag a kitten or a cat this afternoon, but I am afraid that in her carefully evasive replies she showed that the Labour party has no underlying commitment to maintain the ERM parities for sterling.
I came here this afternoon hoping that the hon. Member for Derby, South would give us a more coherent exposition of the Labour party's economic policies. As inflation was the subject of the debate, I hoped that she would speak about the Labour party's approach to inflation and how it would control it and continue to bear down on it. I suppose that I was over-optimistic. Of course, we have been disappointed again. But one or two chinks of light have been seen on the Labour party's real approach to economic policy. Many people have pointed out that there is a yawning gap at the centre of the Labour party's economic policies because it has not reconciled its expenditure commitments with either its plans for taxation or its approach to borrowing and interest rates.
I suspect that at the heart of the Labour party's policy is the policy that dare not speak its name—printing money. That is the only way out that the Labour party has left.

Mr. Radice: I am interested to hear what the right hon. Gentleman has to say, but will he comment on the fact that the public sector borrowing requirement is likely to be well over £20 billion under a Government who are apparently committed to balancing the budget?

Sir Ian Stewart: I will do so but only briefly because it is not the subject of my speech. I did not hear the hon. Gentleman complain when the public sector debt repayment figure was large. That is something which his party never achieved. Of course, at certain points in the economic cycle there will be a surplus and at others a deficit. I believe that an acceptable deficit at this point in the economic cycle is the correct policy. I hope that my right hon. Friends will follow that. We have never raised the public sector borrowing requirement to anything like the percentage of gross domestic product to which the Labour party raised it when it was in office.
The Labour party says that it will not increase taxes other than those to which it has already committed itself. It says that it will make public expenditure increases within the amount that it can afford. The figures do not add up. The Labour party must accept that, unless it is prepared to explain how its policies will be implemented, its commitments and expressions of adherence to the


exchange rate discipline of the ERM will not be believed. Unless it is prepared to sort that out before or during the election, it will not be able to argue that it has a coherent or responsible policy for economic management and, therefore, that it is credible and could be trusted with the government of Britain.

Mr. Stuart Randall: Will the right hon. Gentleman give way?

Sir Ian Stewart: Yes, but I am under pressure of time.

Mr. Randall: I have listened carefully to the right hon. Gentleman. His speech so far has been based on the completely false assumption that the Labour party will go ahead with a spending programme based on a Tory propaganda figure—£35 billion, £50 billion or whatever. That is an utterly false assumption, so the validity of everything that he is saying is out of court. I wish that the Conservative party would stop peddling its propaganda in that way because it results in worthless debating time.

Sir Ian Stewart: The hon. Gentleman is a decent chap, and I do not want to pin the blame on him, but if he wants his party to be taken seriously he has to persuade the leadership of the Labour party to stop its spokesmen saying in every debate and at meetings throughout the country on health, education, transport and everything else that they have massive spending priorities for an incoming Labour Government. If the Labour party is prepared to scrap all that, to rip it out of its policy documents, and not to mention it in manifestos, Labour would attract greater credibility. Until it does so, one can only take the Labour party at face value.
If Labour Members spell things out in such detail and if their spokesmen go to such great lengths to explain what they want to do, it is not surprising that people will believe them. Labour has undermined its credibility by having internally inconsistent policy objectives, and I am trying to point that out. I am trying to be helpful to Labour because its policies would be more credible if the party faced up to that central problem.
I have been too generous in giving way to comply with the request of the Chair that we should not speak at great length. As we approach the Budget, the question is: would it be inflationary to have some reduction in taxation? My view is that it would not. At this stage of the economic cycle it is clear that the savings ratio is high. Consumers, for many reasons—not excluding the fact that they live in fear of the Labour party's tax policies—are reluctant to commit themselves to expenditure of the kind that would assist in bringing about further economic recovery.
If my right hon. Friend the Chancellor concludes that it would be possible to reduce personal taxation in this Budget, he would be right to do so on economic grounds. That is the right economic response to the present position.

Mr. Radice: It is deathbed Keynesianism.

Sir Ian Stewart: One problem with the policies advocated by Lord Keynes was that they were always applied in one part of a cycle but not in the other part. Lord Keynes never said that one had to stimulate the economy with extra borrowing and public expenditure not

only when it needed to be given a stimulus but also once it was growing at a satisfactory rate. That is why the so-called Keynesian approach to economics fell down.
The correct time for adjustments in personal taxation is not only when they can be afforded because of the fiscal position but when it is the right moment in the economic cycle. I can only recommend reductions in personal taxation if they are accompanied by a commitment to keep firm control on public expenditure as the economy recovers, so that the public sector borrowing requirement reduces as the recovery takes place. Without such a commitment I would not make that recommendation, but with it I have no doubt that it would assist in the approach to consumer confidence which is a necessary part of the platform for economic recovery that the Government are putting in place.
In those circumstances, I regret that, in an economic debate, the Labour party has once again failed to tackle any of the central issues in a way that would inspire confidence in its proposals and lead to economic recovery. Labour has dodged the issue of how it would tackle inflation and has added to the confusion about its monetary and exchange rate policy. This afternoon the Labour party has demonstrated that it is even more unfit to come into government than I thought before the debate and the debate will certainly have helped to ensure that it does not.

Mr. Michael Foot: I hope that the first speaker from the Government Front Bench will be kind enough to return to the House. In years gone by, we had an old custom that the main speakers in a debate used to stay to listen to replies to their questions, but perhaps that has changed. Possibly the Chief Secretary will return.
I shall try to discover why this debate has taken place. It is certainly something of a mystery. However, it would be rude of me if I did not also comment on the speech of the right hon. Member for Hertfordshire, North (Sir. I. Stewart). I understand that he has been a great defender of the Government's monetarist policies in the past decade. Five or 10 years ago, during debates on this subject, Government spokesmen made great speeches—I dare say that the Chief Secretary to the Treasury, or whatever he calls himself, who has just left us, made many speeches on the same topic—but how different was their allegiance and the economic policies which they followed.
We are witnessing the biggest somersault of the monetarists in history. The next Budget will be produced on full-blooded Keynesian lines, although it is rough on Keynes that his name should be used in such disreputable circumstances. Even so, they are using good Keynesian arguments now. Those of us who were brought up on Keynes think that the application of his doctrines should be more carefully considered, and I hope that the Government will do that before they proceed along those lines.
I heard every word in the speech of the right hon. Member for Hertfordshire, North. He said that he was convinced by the Government's case, but that he was not at all convinced by the case which my hon. Friend the Member for Derby, South (Mrs. Beckett) put so well. Well, he must be a hopeless case. He is beyond all recovery.

Mr. Marlow: rose—

Mr. Foot: I shall give way to the hon. Gentleman in a moment if he is so anxious to interrupt.
I should have thought that any normal person listening to the two speeches by the Chief Secretary and the right hon. Member for Hertfordshire, North would have been insulted. I thought that the House was insulted by the speech from the Treasury Bench but, as is the custom, the speech by my hon. Friend the Member for Derby, South was different. Never in the history of Oppositions has there been such a settled, deliberate and determined case—she presented the figures to the nation so that people could balance the different sides of the equation. This Opposition and my hon. Friend have done that more skilfully than any other Opposition. She has put the case on behalf of the entire official Opposition. That is one of the reasons why the Labour party will win the next election.

Mr. Marlow: I am grateful for the right hon. Gentleman's courtesy. He says that he is impressed by the case put forward by his hon. Friend the Member for Derby, South (Mrs. Beckett). Could he tell what that case was, because I do not think that any of us heard her put a case? Could he tell us how she would maintain the parity of sterling within the ERM? What would she do with interest rates in those circumstances—would she use them?

Mr. Foot: I recommend that the hon. Gentleman reads the case put by my hon. Friend—[HON. MEMBERS: "He cannot."] If he could not hear her, I hope that his eyes will be able to rectify the position and that he will study exactly what she said. Anyone comparing the two cases put by the Front Benches could see the difference, and could see that my hon. Friend's was a first-class case.
I have discovered the reason for the Chief Secretary's difficulties. I may be the only Member of Parliament who has discovered the origin of this debate. The secret was out in a newspaper report which I read the other day. It said that the Prime Minister had set up a special committee to advise him on election tactics. The names in the report made an interesting list. Such an auspicious committee should have a fitting name; perhaps it could be called the "flagship committee", because that has a good auld lang syne ring about it. All its members are strong supporters of the poll tax, and no doubt that is one of the qualifications for membership.
The flagship committee has serious problems to solve. For example, what will be done with the right hon. Member for Finchley (Mrs. Thatcher) during the election? Is there still a helicopter to take her to Southend without running the risk of a forced landing in Old Bexley and Sidcup on the way back? For such an old-fashioned debate the chief cook and bottle washer of the Conservative party, the Chancellor of the Duchy of Lancaster, the right hon. Member for Bath (Mr. Patten), should be here. We all remember his wonderful speech in defence of the poll tax when the right hon. Member for Finchley sat beside him. He spoke for one and a quarter hours without a single note, without hesitation and without a single principle. No doubt he is fully qualified to sit on the flagship committee.
Some people used to think that the Secretary of State for Education and Science, who represents a Nottinghamshire constituency, was not sufficiently ardent in his Thatcherism. He goes to committee meetings waving his emblem. No doubt he waves his wallet and they know that he is a proper Thatcherite at heart.
It is customary for Chancellors of the Exchequer to sit on such committees, and apparently the present Chancellor has been invited. However, the Prime Minister could have been forgiven for thinking that there was a case for saying that it would not be too heavy a cost to bear if the Chancellor were not on the committee. It would be a price worth paying, shall we say? Perhaps the Prime Minister considered it on those counts. The people of the committee are a remarkable lot.
The Chief Secretary to the Treasury was not even invited. He was sent along here but, having listened to his speech, I wish that the exchange had been the other way round. The Secretary of State for the Environment spoke a few days ago, and I thought that we would get him again today. He was in tremendous form; I thought that at any moment he would make off again with the Mace. Oliver Cromwell did that only once but I thought that the right hon. Gentleman was about to do it for the second time.
I do not hold the Mace episode against the right hon. Gentleman, and I have often thought that it was the best thing he ever did. It was certainly the most dangerous military action in which he was engaged after he was in the Ministry of Defence. Some of us recall the right hon. Gentleman coming to the House with the mud and blood of battle on his tunic from Greenham Common. He thought that he had managed a wonderful victory and that that should have made him Prime Minister. It is certainly a better reason than the others that he seems to be advancing.
If the flagship committee is not as successful as it should be, I hope that some others will be invited to help. We do not see him often in his place, but what about the right hon. Member for Plymouth, Devonport (Dr. Owen)? He seems to be at a loose end at the moment. He could be invited to come along, and I am sure that he would not charge anything, although he might insist on one of Lord Young's sweeteners being arranged after the election. Perhaps that bargain has already been sealed. If the right hon. Member for Devonport appears on a Conservative platform, or even the Prime Minister's platform, during the election campaign, we can conclude that such a bargain has been made, and we shall all watch to see whether it will be kept.
The Prime Minister himself is on the flagship committee. At the weekend, he spoke feelingly about his passion for maintaining the unity of the United Kingdom. Not all of us have been able to see whether he has a heart, but when he went to Scotland he expressed his passionate support for maintaining the unity of the United Kingdom. Was his passion still burning, or had it burnt out after discussions in previous flagship committees about whether the poll tax should be applied to Scotland?
It would have been an apposite moment to bring up the matter if someone had said, "Hold on a moment. Do you think that it is a good thing for the unity of the United Kingdom to go ahead with this horrific tax and impose it on the Scots even before it has been worked out for England?" If the Prime Minister is such an eager supporter of the unity of the United Kingdom, it might have occurred to him three or four years ago when the matter was being discussed by the flagship committee of those times.
Another of the Chief Secretary's qualifications for being on the committee is that he has been a strong supporter of the poll tax and has voted for every poll tax measure that has been guillotined. I do not say that he was


one of its inventors, although he would have claimed he was if he had thought that it would do him any good at the time. He disowned those matters easily thereafter.
The whole exhibition of the flagship committee is due chiefly to the poll tax, but it is also connected with all the Government's other misdemeanours, disasters and economic catastrophes. It has been one of the most disgraceful episodes of our political history. It is not easy to find words to describe it properly. The best words to describe the conduct of the flagship committees and their past, present and attempted future were written by Alexander Pope:
As hags hold sabbaths, less from joy than spite, So these their merry, miserable night… Still round and round the ghosts of beauty glide, And haunt the places where their honour died.
That is a fitting epitaph for the Government.
We have seen, especially during the past few years but even before that, the prostitution of Parliament to serve the narrow interest of the Conservative party. That has happened before in our history, and when prostitution has taken place on that scale, as it did in the 1930s, the threat to our country has been severe. I do not say that the present Administration have the same evil quality as the Conservative Government of the 1930s, but they are the nearest rival in our history, and we should take account of that.
I say that not only because of the Government's antics and the way that they have pressed through legislation, or because of their performance in this debate, but because of their performance over the whole poll tax Parliament. We are approaching the end of it, and as soon as the flagship committee has the courage to go to the country, the people will pronounce on this perverted, prostituted Parliament the judgment that they pronounced in 1945. The liberation that the British people sought then they will seek again, and nothing will stop them achieving it.

Sir Gerrard Neale: It is always a pleasure to be in the Chamber to listen to the right hon. Member for Blaenau Gwent (Mr. Foot). His best speeches have a number of consistent points—they show great parliamentary debating skill and great humour, but his very best ones rarely deal with the point of the debate. It was interesting to note that, even in response to an intervention, he found it impossible to clarify the Opposition's stance on the exchange rate mechanism.
My right hon. and learned Friend the Chief Secretary and the Treasury team have every cause to be congratulated on their achievements on the rate of inflation. It is no surprise to me—although it appears to be one to Labour Members —that we are having a debate on inflation. When right hon. Friend the Prime Minister took office, he made it plain that low inflation was a fundamental part of his policy. He was joined in that by our right hon. Friend the Chancellor of the Exchequer, who made it similarly plain.
I am glad to see my hon. Friend the Member for Cornwall, South-East (Mr. Hicks) in his place and no doubt hoping to catch your eye, Mr. Speaker. We view the position with a clear perspective—that high inflation is bad news for the economy of the west country in general and of Cornwall in particular. I am surprised that the

Opposition do not appear to have grasped the fundamental importance of inflation to our economy. Several industries in Cornwall have been hit by high inflation. Tourism suffers dramatically if prices rise quickly; our farming industry is hit heavily if food prices rise quickly; and our economy depends on competitive pricing and firm monetary policies. Without them, we would have fearfully high levels of unemployment and transport costs, which would make it impossible for us to get our products and services into the economy of the remainder of the United Kingdom.
I want to make a few comments on behalf of small business. Some 85 per cent. of businesses in Britain employ fewer than six people, and 95 per cent. fewer than 20. They are fearful of what would happen if the Labour party took office—although I agree with my right hon. Friend the Member for Hertfordshire, North (Sir I. Stewart) that that is very much less likely after the speeches that we have heard today from Labour Members. Small business men have a fear of high interest rates. Labour Mambers may chuckle, but my right hon. and learned Friend the Chief Secretary let them off lightly today. He quoted a number of reports from different economic institutions on the calculations of any increase in interest rates. He referred to the Nomura report, but what he did not say—and what the Opposition should remind themselves of—is that the report envisages that, with the advent of a Labour Government, interest rates could rise not by 2 per cent., but by 21 per cent. If we need proof of where that has happened before, we need look only at what happened when a socialist President was elected in France and short-term rates rose to 31 per cent.
I know that it is unpalatable, but Labour Members must accept that unless they are much clearer about their economic policy, especially in relation to the exchange rate mechanism, on the night of the election the institutions handling funds will be ready to remove money from this country at the very moment that they think there is any threat of a Labour Government. It is not something that any of us can do anything about. Those people handle funds on behalf of investors. If they think that there is a risk of a Labour Government, with the sort of wishy-washy approach that they would take, the institutions will move money out of this country at such a rate that the rate of inflation will have to rocket if the Labour party is to hold firm to the ERM. If any Labour Member disbelieves me, he should look at the Nomura report.
My right hon. and learned Friend the Chief Secretary and my right hon. Friend the Member for Hertfordshire, North referred to the minimum wage. I say again to Labour Members that if they came to my constituency, which is heavily dominated by small businesses—as many rural constituencies are—they would appreciate that those employed in such businesses on low wages help to keep the books and to collect the money. There is little money in many of those businesses because they are small. Everybody is a Man Friday of some description or another. They know the facts of life for their businesses.
Of course, everybody would like to have more money per week. The bosses of those small businesses would like to have more money per week. There is hardly anyone in this country who would not like to have more money per week. However, the people in those small businesses know that the money simply is not there. If a minimum wage were imposed, such businesses would disappear. To


survive, many of them need the same number of people that they have helping them; they could not get by with fewer people. If the basic wage is pushed up, those businesses would become unviable.
My right hon. Friend the Member for Hertfordshire, North pointed out the way in which a minimum wage could affect differentials. In the west country, like any other area, those in small businesses—which are trading in considerable difficulty, not only because of the market place but because of their size—understand that the minimum wage would kill many jobs as quickly as a snap of the fingers.
Another matter relating to small business is especially important and I have spoken to Treasury Ministers about it. The Government have been extremely supportive of small companies by helping them to expand and by allowing them to keep more in their pockets by lowering the level of taxation.

Mr. Enright: And by helping them to go bankrupt.

Sir Gerrard Neale: The hon. Gentleman should think about how many small businesses there are now compared with 1979. He should remember that there are now relatively more people in employment in this country than all other Europan countries bar one.
The Government deserve congratulation for supporting small companies. Undistributed profits are now taxed at a rate of only 25 per cent. up to a limit of £250,000, and beyond that there is a graded scale up to 37 per cent. That has enormously helped small companies. There remains an inconsistency, however, in respect of unincorporated firms. Once the profit level reaches £23,700, if there is a single proprietor—and whether or not the profit is drawn—the tax level rises from 25 per cent. to 40 per cent. If there are two partners and the profit level is double that I mentioned, the same situation arises.
That disadvantage was clearly identified by the National Federation of Self Employed and Small Businesses, and it could be overcome if undistributed profits made by small unincorporated firms were taxed on the same basis as that applying to incorporated companies. Over a 12-month period, an unincorporated firm would gain enormously, as incorporated businesses do. The money saved could be invested in new equipment, such as computers, or creating new jobs.
I dispute the argument that such an arrangement would be impracticable because there is no set accounting procedure for small, unincorporated businesses. Every such firm keeps accounts, not least for the purposes of calculating value added tax. The Inland Revenue informs me that there are 2·8 million unincorporated businesses, and it estimates that 470,000 of them pay tax at the 40 per cent. rate.
The Government have proved conclusively how welcome have been their successful actions in respect of incorporated businesses, and I ask my hon. Friend the Economic Secretary to consider the case of the small unincorporated business sector in future. The Government's policies have secured the great achievement of an inflation rate currently of only 4·1 per cent., and they show every sign of reducing it further.
The Government made it perfectly plain that the process would be extremely painful for many sectors of business, but they clearly explained their policies and their effects. Those policies are working, and it is evident to me

and to all my hon. and right hon. Friends that were the country to suffer the misfortune of Labour being elected to power, a Labour Government would never show anything close to the determination displayed by my right hon. and learned Friend the Chief Secretary and the other members of the Treasury team in defending the value of sterling and this country against the high inflation rates that we saw under previous Labour Governments.

Mr. A. N. Beith: In making his useful points about small businesses, I am surprised that the hon. Member for Cornwall, North (Sir G. Neale) did not refer also to the penal level of uniform business rate that small firms suffer, involving the projection by the Government of the highest rates of inflation into small business costs for the following year—using the maximum permitted level—instead of exercising the discretion that the Government had to set the business rate at a significantly lower level. That decision has affected businesses of all sizes, and small firms in particular.
Inflation is bad. I am sure that other right hon. and hon. Members have shared my experience of being told by constituents, and by pensioners in particular, every time that the television news announces a fall in inflation, "I don't understand it. They say that inflation is coming down, but prices are rising in the shops that I use."
Any inflation means rising prices, so unless there is zero inflation, we are talking about something that damages the economy in a number of ways. Inflation makes pricing impossible, disguises relative prices, and enables some price rises to be concealed in the general level of increases —and thereby prohibits rational economic decisions being made. Inflation redistributes wealth from the prudent to the profligate. It penalises saving and rewards borrowing.
Inflation makes property a more attractive investment than production, and allows Governments to escape responsibility for their actions. It is not without significance that the two groups that tend to like inflation are those who borrow extremely heavily and see the cost of their debt falling, and Governments who behave imprudently and want to rescue themselves from their actions by printing more money.
Inflation is at the root of all short-termism, and is the enemy of sensible, long-term decisions. One cannot safely predict what to do about business investment and pricing if one does not know what will happen to the future value of the country's currency.
Even modest levels of inflation can be highly significant. Inflation of only 5 per cent. will bring a doubling of prices in 14 years. We should not deceive ourselves that, because inflation is currently running at 4 per cent. to 5 per cent., the problem is solved. The problem remains, and much more must be done.
The Government obviously tabled today's motion to emphasise that Labour does not appear to have any policies for dealing with inflation. However, the debate has the added effect of emphasising that the Government also are short of policies. Let us start, however, with Labour.
Even our old friend credit control has disappeared from Labour's amendment. It must have accepted at long last that credit control is not a feasible or practicable way of containing inflation, and is not something that could reasonably be introduced into the economy. Labour no longer mentions that subject.
I did not expect the debate to end with even more doubt being cast on Labour's already weak position on inflation —but it was, by the unwillingness of the hon. Member for Derby, South (Mrs. Beckett) to answer with a straight yes the question "Would you be prepared to see interest rates increase if that was necessary to defend sterling's position in the exchange rate mechanism?" There were shades of Labour's old attitude to nuclear weapons—"It may be necessary to have them, but we announce now that in no circumstances will we ever use them."
There is no point in being a member of the ERM and having interest rates that, although uncomfortable in their effects, are not as drastic as nuclear weapons if one is not prepared to say that one is prepared to use them.
I accept that the hon. Member for Derby, South believes in Britain keeping its position in the ERM, but her very hesitation is a dangerous signal.

Mr. Enright: Is the hon. Gentleman suggesting that the only way to maintain parity in the exchange rate mechanism is by use of interest rates? That is an interesting economic theory.

Mr. Beith: That is a method which Governments use, and which the present Government have been compelled to employ. Intervention by use of reserves is one such mechanism that must be used in those circumstances. General economic management is another. At the end of the day, however, if one is not prepared to use the interest rate weapon, one might as well not be in the ERM.

Mr. Enright: The hon. Gentleman did not—

Mr. Beith: The hon. Gentleman has a loud voice, but that does not alter the fact that his argument is weak. The hon. Member for Derby, South could have given a simple and straightforward answer, but she did not. It was unwise of her to take that stance.
The Government's problem is that they have two anti-inflation policies. One is membership of the ERM. The Chancellor of the Exchequer has answered questions from me to the effect that he would use interest rates if necessary to maintain this country's position. The other is recession—which is, by the Government's own indications, a temporary mechanism. They do not want recession to continue, but it looks likely to remain for some time. When it ends and recovery arrives, prices will no longer remain as low as they have been recently.
It is incontrovertible that over the Christmas and new year period prices of household goods were lowered, and that had a beneficial effect on the retail prices index. If recessionary conditions change, as we all hope they will, the Government will need other means of controlling inflation, yet they still show no sign of being willing to address that question.
Nor can the Government claim an unblemished record. Britain has one of the worst records for inflation. Since 1950, prices in Britain increased faster than in the United States, Germany, France, Japan, or Canada. Italy apart, Britain has the worst inflation record of all the G7 countries.
The British people have seen the value of their pound reduced under successive Governments, both Conservative and Labour. Since 1950, the pound's value has fallen consistently: a 1950 pound is worth only 7p

today, whereas today's German mark and American dollar are worth 32 per cent. and 19 per cent. of their respective 1950 values.
If that record is ever to improve, Britain must adopt a long-term policy to deal with inflation. Our advocacy of an independent central bank, committed to price stability, is the only such policy that is on offer to the British people. I have rarely heard a more compelling demonstration of the case for an independent central bank than that provided by the evasiveness shown today by hon. Member for Derby, South. I should be much happier if I knew that the central bank would decide interest rate policy on the basis of price stability and maintaining sterling's position, and that future Ministers in any party would have nothing to do with that decision—that they would get on with the job of managing fiscal policy and providing the infrastructure that the economy requires.
If control of interest rates were taken out of the hands of politicians and given to an independent central bank, the fight against inflation would be continued all the time, and the problem of Governments going soft on inflation —particularly in the run-up to general elections—would be avoided. Greater stability of prices, interest rates and economic growth would result. Recent studies have concluded that countries with independent central banks typically enjoy lower inflation, irrespective of their political make-up and budgetary policies; and there is no cost in terms of lower growth.

Mr. Ian Taylor: I have followed the hon. Gentleman's argument about price stability. Can he tell us what would be his party's policy at this juncture? It appears that he has some plans to raise taxes, but that, surely, would be an irresponsible policy for a country that is moving out of a recession. Will he clarify his party's fiscal policy?

Mr. Beith: It is certainly not irresponsible to invest in the economy now, as we suggest. As was pointed out in a recent report by the Treasury and Civil Service Select Committee, the best time at which to invest in the public infrastructure is a time of recession. Some of the investment will need to be financed by borrowing, but I regard investment as a much more prudent use of borrowing than tax cuts. Tax cuts ought to be achieved by means of growth, which should bring public finances to a point at which we do not need as much revenue, or revenue is buoyant because of the extent of that growth in the economy.
Surely it is much more prudent to use the means at our disposal to invest now. Such tax cuts as we have proposed have been designed either to make real decisions possible on such matters as the use of energy, or to achieve a better distribution between the richest in society and the poorest. We have made specific proposals—different from Labour's proposals—about the tax scale. Our proposals are designed to enable us to increase pensions and child benefit.
Incidentally, that would probably work into the economy faster than tax cuts granted to the better off. On the whole, people with no money to spend will spend more of what they subsequently gain by way of increases in pensions and benefits.
The absence of any coherent alternative suggests that no one can produce a better method of building in a firm anti-inflation policy than central bank independence. Already, the Government are becoming complacent about


their inflation policy. The Prime Minister claimed that he had inflation licked—although prices were still rising at a rate of more than 4 per cent. a year, and although the recent reductions have taken place during the longest recession since the 1930s and could easily be reversed in the event of a recovery. Prices have more than doubled since May 1979; the pound of May 1979 is worth only 41p in 1992.
Labour scarcely mentions inflation in its economic policy documents. I do not think that the party sees inflation as a problem: I do not think that it recognises the corrosive effects of inflation to which I referred at the beginning of my speech. Labour appears to have abandoned the policy of credit controls, for instance.
Having read the motion and the amendment, we find that we are left with the only coherent alternative—an alternative that we shall probably use in the end in any event. The Government have given us to understand that, if we joined the European monetary system and a single currency were introduced, that currency would have to be operated by an independent central bank. The Chancellor has been quite clear about that. He said in the House that, in stage 3, the European central bank
would have to be free to set interest rates without interference. That is the view of every member state."—[Official Report, 21 November 1991; Vol. 199, c. 517.]
Clearly, the Chancellor has accepted that a European single currency could not be run without an independent central bank. Why should we not enjoy that advantage now? Why should we not say, here and now, that the central bank would exercise independent responsibility for monetary policy, having price stability as its objective?
That would be a much better position to adopt for an Opposition party entering an election. It would be helpful if people knew that, during an election campaign and subsequently, a central bank would exercise that independent responsibility. The Government might do the country a service. If they are so worried about the consequences of other parties' coming into office, why do they not build that in now as part of a firm, permanent anti-inflation policy?

The Economic Secretary to the Treasury (Mr. John Maples): Surely there is a difference between an independent central bank that is running a single currency—I do not think that there is any practical alternative to that—and the Government of the day continuing to be responsible to the House of Commons for monetary policy when running their own currency. I follow the hon. Gentleman's argument about the independent central bank; indeed, some examples, such as the Bundesbank, work extremely well. Does he not agree, however, that some non-independent central banks—such as those in Japan and France—seem to work equally well?

Mr. Beith: Japan's central bank has gradually increased its independence from Government, and that has contributed to Japan's control of inflation. Let us take the example of countries that simply have more independent central banks than we have. The United States Federal Reserve, for instance, is not an independent central bank in the full sense of the term, but it has still been able to produce a better inflation record—even with its high public-sector deficits—than we have managed in this country. Generally, the record seems favourable.
As the Economic Secretary pointed out, there is a difference between running a single currency for Europe

and running our own domestic currency. There is a practical difference: taking instructions from 12 or more Governments would be even worse than taking instructions from one Government. A central bank will be in a much better position if, on this issue, it takes no instructions from Governments. The present Government are denying themselves a permanent contribution to anti-inflation policy by refusing to embody that principle in our system.
There are many other ways in which we should fight inflation. We should fight it by increasing our manufacturing capacity; we should fight it by promoting competition, and by ensuring that we do not have the rigged markets that exist now in some of the privatised utilities, where genuine competition has not been allowed to develop. Competition is crucial to keeping prices down. At the end of the day, however, the only firm and reliable anchor is an independent central bank, and we shall continue to advocate it until, eventually, the country gets it.

Mr. Dudley Fishburn: It is a pleasure to follow the hon. Member for Berwick-upon-Tweed (Mr. Beith), who could justly claim—perhaps alone—that when his party was last in power, before Britain came off the gold standard, inflation rates were very much more stable and sensible than they are today.
As my hon. Friend the Member for Cornwall, North (Sir G. Neale) said earlier, the remarkable control of inflation that has been exercised over the past 18 months is a real tribute to my right hon. Friend the Prime Minister, who made it clear that that would be his top priority when he got the job. Moreover, it was he who, as Chancellor of the Exchequer, took us into the exchange rate mechanism—a discipline that has done so much to squeeze out inflation from our economy in the long term and, notwithstanding the prevarications of Opposition Front Benchers, will continue to do so.
Interestingly, in those first speeches when my right hon. Friend the Prime Minister determined the need to control inflation, he made the point that is so seldom made: inflation is, above all, a social cruelty. It hurts parts of our society that are often overlooked in the great economic debates. It hurts the quiet: those who save, the elderly and others who are often at the greatest disadvantage. My right hon. Friend the Prime Minister was right to say that that was one of the main reasons to control inflation.
The previous Prime Minister also believed strongly in the need to control inflation, but she took her eye off the ball. Had she but done what the German Chancellor did so frequently, and looked at the back pages of The Economist every week, she would have seen that the broad gauge of monetary growth in 1987, 1988 and 1989 was running away at a rate that was much greater than the economic growth of the time. Even though economic growth in those years was strong, at about 4 per cent. a year, none the less monetary growth was between three and four times the rate of our real economic growth.
There is no mystery about inflation. If the rate of increase in the amount of money keeps pace with the growth of domestic output, there is no inflation. If, however, the increase in the amount of money runs ahead of the increase in gross domestic output, there is inflation. The likelihood is that we shall have real growth in the


economy of about 2 per cent. in the year ahead. If the money supply grows by about 6 per cent. in the year ahead, then, as sure as eggs is eggs, inflation will be about 4 per cent.
The chance now before us—the success of the past 18 months has led to that chance—is to reach out and grab not stability at 4 per cent. but stability at 0 per cent. inflation: to have a system in this country, as other countries have had so frequently in the past, under which the value of money and the price of a basket of consumer goods do not change from year to year. We shall look ahead, as my right hon. Friend the Member for Hertfordshire, North (Sir I. Stewart) so clearly said, to the long term without the short-term uncertainty that creates its own disparities.
I was delighted to hear the speech of the right hon. Member for Blaenau Gwent (Mr. Foot), not least because, as always with him, there was that great historic reach. He went back through Alexander Pope to Oliver Cromwell. If we were to return to a time of 0 per cent. inflation, it would be, on any historic basis, a return to normality. It is broadly true to say that, from the time of the Restoration after Oliver Cromwell until the outbreak of the first world war 250 years later, consumer prices in Britain remained stable. That is not to say that prices in Britain did not change within that general overall basket. Of course they did. For example, there was the dramatic collapse in the price of wheat in the 19th century which, in itself, led to the industrial wealth of that century.
When there is stability within a currency, leading to stability of prices overall, there can of course be great changes in individual parts of the economy. It is interesting to note that throughout the 19th century—the time of greatest industrial wealth and expansion in this country —when things were changing with every passing decade, there was, none the less, complete price stability. From the start of the 19th century to its end there was no change. I recall the famous anecdote of the Duke of Wellington who, in 1933, sold some land that his ancestor had bought on returning home triumphant from the battle of Waterloo. He sold, for exactly the same price sterling, exactly the same amount of land as the first Duke of Wellington had purchased.
The real increase in inflation started when we abandoned the gold standard in the 1930s. Since then, the value of the pound has fallen catastrophically—to about 2·5 per cent. of its value in 1933. However, the chance to reach out and grab true stability-0 per cent. inflation—will take great political courage. In a sense, inflation is like valium. It creates an easy sense of well-being. One can do nothing very much, yet one can feel that things are jogging along nicely.
It is in that drugged state that many savers say that they like inflation. It gives them the illusion of a high rate of return on their investment. House owners may say that they like inflation because it wipes out their debt and seems to give them a capital increase on their main investment. Some companies pretend at times to like inflation because it gives them a seemingly effortless ability to increase turnover and profit. Worst of all, though, Governments occasionally say that they like inflation because it allows them to hand out excessive public spending year after year without having to pay the true cost.
No party likes inflation more than the Labour party. When the Labour party was in power, it was what can only be described as an inflation junky, with prices rising year after year, way beyond 5 per cent. inflation—which gives that easy, if illusory, feeling of well-being—to about 20 per cent. inflation, which led to economic catastrophe.
We now all know—it is not a matter of debate—that the sense of ease that even low inflation gives is wholly illusory. It undermines Britain's wealth year after year. Even 4 or 5 per cent. inflation, which seems to be so attractive, undermines and, in the course of 20 years, almost eradicates the existing wealth of the country—the wealth that has been built up over generations. Even worse than that, it blunts the ability and the zest of those people who are able to create wealth in our society, for the benefit of us all.
There are only two ways in which we shall fail to reach this chance of price stability, of zero inflation. The first is devaluation. One hesitates to say it, but I think that the reply that the hon. Member for Berwick-upon-Tweed gave this afternoon increases the likelihood that we shall have a sterling devaluation, or that there will be uncertainty over sterling in the years ahead.

Mr. Beith: Does the hon. Gentleman agree that that was the reply that I elicited from the hon. Member for Derby, South (Mrs. Beckett)?

Mr. Fishburn: I apologise to the hon. Gentleman for not having made that clear.
The risk of devaluation is one of the ways in which we can be sure that our inflation norm of 0 per cent. cannot be reached. Devaluation would not make this country more competitive. It would make higher interest rates a certainty—a spectre that would cast its shadow for years ahead. It would also mean that once again we would absorb other countries' inflation through higher import costs. Membership of the exchange rate mechanism, to which the Government are so strongly committed, puts the risk of devaluation behind us, so long as the Government remain in power.
As for the second way in which inflation could take off again, an increase in our domestic money supply could come about as a result of excessive Government-induced wage increases in the public sector which have shot ahead of wage increases in the private sector. If we can hold on to the idea that, having reduced inflation to 4 per cent., we can, together with the other countries of Europe, reduce it to the point where there is constant stability, the prize ahead of us will be enormous.
We must not, however, risk becoming number blind. Even if we hold inflation at 4 per cent., we must be aware of the fact that a 6 per cent. pay settlement will be 50 per cent. above the rate of inflation, that a 20 per cent. increase in the community charge will be five times the rate of inflation and that increases in council rents of, say, 16 per cent. will be four times the rate of inflation.
As inflation becomes ever lower, the demand that it makes upon us is that we should not be figure blind and that we should concentrate on the smallest increase in inflation rates. The prize of zero inflation is clear: that we shall have ever lower unit production costs, which will make our exports more competitive. The prize is long-term planning. For the first time, the attraction of shorttermism—the ability to take profit now because of the uncertainties of the future—will be diminished. People will


say to themselves, "I can invest for 10 years in the knowledge that the underlying value of the money that I invest over that decade will not change." Of course, it will increase the well-being of the people because every increase in wages earned in an economy with 0 per cent. inflation is real wealth and not merely an illusion.
Inflation benefits the debtor and penalises the creditor. As society becomes older, as shown in its age profile, so the public will tend to become more a public of savers and less a public of borrowers. They will demand increasingly that we do not allow inflation to rise, as it has done so frequently in the past. Most of all, to keep inflation still and to aim towards the 0 per cent. target will require a political will which my right hon. Friend the Prime Minister has shown. For that reason, I believe that the country will show where its support for him lies.

Mr. Greville Janner: I remind hon. Members that the motion starts by inviting the House, at the Government's behest, to congratulate the Government
on its"—
that is, the Government's—
prudent economic policies".
That anyone should invite the Government to congratulate even themselves on their economic policies is the height of breathtaking cheek. It is the ultimate in chutzpah. It is the most monstrous zenith of shamelessness. The Government are inviting the House to congratulate them on their economic policies when those policies have created a totally unnecessary recession, depression and slump which are ravaging the country. That is a matter of not just statistics but of human suffering.
I wish to hold up my constituency, my city of Leicester and my county of Leicestershire, as a mirror, because I know it best. Of course high inflation is bad news, but low inflation is a disaster when it is at the cost of vast unemployment, a massive collapse of businesses, large and small, mortgage misery and repossessions on an unparalleled scale, poll tax chaos and crime leading to social misery and the breakdown of the lives of far too many families.
A year ago, when the position was only starting to get really bad, The Sunday Times said:
Any fool can reduce inflation when the economy is flat on its back.
Our economy, which the Government say that they have managed prudently, is not just flat on its back; it is prostrate. It is knocked out for the count. It is destroying the lives, security, homes and happiness of millions. Yet the Government say that the House should congratulate them on what they have done.
Jobs do not mean just the right of people to go out to work; they mean the dignity of work, the ability to earn a living and the right not to be in debt. In the east midlands, 49,000 jobs were lost last year, 29,000 of them in manufacturing industries. Manufacturing industry is on its back. It is in the worst mess that it has ever been in.
My dad, who was Member of Parliament for my seat—yes, I have an hereditary seat, of which I am proud—used to say, "Don't worry, my boy, about Leicester. It will be all right, because in Leicester we make what people have to have—hosiery, knitwear and shoes. They cannot go without them. In the last slump in the 1930s, Leicester was fine. Don't worry, my boy. Leicester

is the second most prosperous city in Europe". My poor father would turn in his grave if he knew what was happening today. Hosiery, knitwear and footwear are all dying. The traditional industries of our city are prostrate and jobs are falling away.
Since 1979, when the Government came into power, unemployment in Leicester has risen by 174 per cent. That is the second highest rise in the country. In my constituency, unemployment rose by 37 per cent. in the last year. That is not just a statistic: it means human misery and disaster.
Anyone who doubts that should come to my surgeries to meet the people who come to seek help. In the past, those were often manual workers, people without skills. Such people may have no special skills to sell, but they are just as entitled to jobs as brilliant people emerging from universities and technical colleges.
Recently, three professional people have come to my surgery. One was an accountant who had been employed in a major accountancy firm in the City and who had come back home to Leicester for family reasons; he could not get a job. A second accountant had been told by the local job centre that, because he was under 5 ft, he was too small, and that was why he could not get a job. That was ridiculous.
When we consider how difficult it is for people of average height, with average intelligence, to get jobs, what a terrible time it is for the disabled, the sick, the handicapped and people with learning difficulties who have to compete in the same market. There are no jobs for them. For that we get low inflation. Thank you very much. I prefer higher inflation and jobs for my constituents.
It is not just the unemployed and the ordinary workers, as they are sometimes called, who have a problem. Some of the worst sufferers now are people who have never been unemployed in their lives. For the first six months, they cannot get help from the Government because of the rules. They cannot even get on training schemes, and they do not know how to cope.
I am president of an organisation called the Retired Executives Action Clearing House, REACH. It is a fine, non-political organisation which looks for jobs for people who were retired early, when in their prime. They want to do something constructive even if they are not paid. People are entitled to jobs when they are young, but as I approach middle age I think that jobs for older people are also important. Why should not people have jobs? We are told that it would create higher inflation and that the cost is too high. The cost of low inflation is too high and is ravaging the lives of too many of my constituents.
As to business failures, there was a 79·4 per cent. increase in the east midlands last year. There was a 96·5 per cent. rise in bankruptcies. Do the Government know that? These were honest, decent business people who have gone bust. They could not pay their debts. When they go down, they pull other people down with them. Those innocent people all suffer because the Government, who are inviting us to congratulate them on their economic policy of all things, do not know how to manage a corner shop. It is a disgrace. The east midlands has become the worst region for business failures, and it is the Government's fault. Firms large and small are going out of business unnecessarily. That is the cost of low inflation.
I always thought that people were entitled to homes. My right hon. Friend the Member for Blaenau Gwent (Mr. Foot) is wearing a daffodil.
The land, the land, it was God that gave the land, God that gave land to the people.
That was another of my father's ditties. People are entitled to a roof over their heads. What has happened, all in the name of low inflation? House prices have collapsed. That is not all right for those who happen to own houses, especially if the house is a family's entire wealth. If someone wants to sell his house so that he can get on his bicycle and go to look for another job, he is stuck because he cannot sell.
People who have bought their houses, including council houses, cannot pay their mortgages. What happens then, in the name of low inflation? In 1991, 716 possession orders were made in Leicester county court—an increase of 48 per cent. on 1990. People who were entitled to have homes lost them. There are no rented houses because, in the name of low inflation, local authorities are not allowed to build houses. They cannot even use the money they get from those that they have sold. So people have no jobs, no businesses and no homes. That is the price of low inflation, and the Government say that we must congratulate them on their record.
They say that they are the Government of law and order. In the name of low inflation, they do not want high pay or too many policemen, although we have a few more than we used to. In Leicester, the number of police may have increased by 10 per cent., but crime has increased by 187 per cent. since 1979. I asked the Home Secretary
by what number, and by what percentage, reported (a) criminal offences and (b) crimes of violence have increased in Leicestershire since May 1979.
The Minister said:
The available information compares the 12 months to June 1979 with the 12 months to June 1991".
They do not want to give us the figures for the next nine months—I do not blame them—because the figures have got much worse.
The answer went on:
Between these periods, the total of notifiable offences in Leicestershire increased by 52,906".
There was an increase from 29,481 to 82,387.
crimes of violence increased by 2,245."—[Official Report, 25 February 1992; Vol. 204, c. 421–22.]
There was an increase from 1,823 to 4,068. Although I asked for the percentage, the Government did not provide it, because it does not sound good. It is an increase of 300 per cent. Crime is burgeoning and our social fabric is collapsing. People do not have homes, jobs or businesses, but we are asked to congratulate the Government on their economic policies. What a cheek.
The Government should be slung out, not congratulated. Recession is when other people are out of work, depression is when you yourself are out of work, and recovery is when the Government are out of work.

Sir David Mitchell: The debate on inflation is particularly well timed just before the Budget. Most people—not all—recognise that inflation is undesirable. The hon. and learned Member for Leicester, West (Mr. Janner) referred to high inflation as bad news and low inflation as worse. He is not alone in thinking that.

Mr. Janner: The hon. Gentleman is a distinguished Member, but he was not listening properly. I said that high inflation is bad news but low inflation is a disaster when it

is at the cost of vast unemployment, massive collapse of businesses, large and small, mortgage misery, repossession of homes, poll tax chaos, crime and breakdown of families. I am obliged to the hon. Gentleman for giving me an opportunity to repeat that.

Sir David Mitchell: If the hon. and learned Gentleman does not think that a "disaster" is even worse, I am not sure what is. On a number of other occasions during his speech—I noted them—he made it clear that he does not regard a little inflation as particularly undesirable.
Many people recognise that inflation damages savings and pensioners. It has an effect on wage claims and on industrial costs. It damages the ability of industry to be able to compete in world markets, particularly industries that deal with forward orders where they have to estimate their costs. It damages the farming industry where selling prices remain static but costs rise continually.
I hope that the hon. and learned Member for Leicester, West will be prepared to consider that there is another hidden effect that is more insidious, damaging, debilitating and, ultimately, more serious. Inflation is the first call on the profits of any and every business. For example, a corner shop may have £5,000 worth of stock on its shelves. If inflation is 10 per cent., next year it must have £5,500 worth of stock if it is to have the same number of packets of cereals and tins on the shelves. The profits will have to be used simply to maintain the amount of stock. A small engineering works may have £1 million worth of work in progress. It could be in Leicester, Andover, Basingstoke or wherever. If inflation is 10 per cent., it would need another £100,000 simply to have the same amount of work in progress a year later. Where would that £100,000 come from? It means that money that should be spent on research, development and investment is used simply to keep pace with inflation.
The hon. and learned Member for Leicester, West said that he would prefer inflation to be a bit higher. Damage would be caused by that because our competitors could spend their money on research, development and investment and so become more competitive. In the world of high inflation, that cannot be done. The first call on every penny is used only to keep the business intact.
Inflation has a cumulative effect. Over the past five years cumulative inflation has been just over 35 per cent. That means, with £1 million worth of work in progress, £350,000 has not been spent on research, development and investment. Inflation damages industry's ability to stay fit and competitive.
To be specific, the cumulative figure for inflation over the past five years is 35·6 per cent. I hope that the hon. and learned Member for Leicester, West will recall that the cumulative figure for the last five years of the previous Labour Government was 100·7 per cent. If a business had £1 million worth of work in progress, after five years of a Labour Government it would need £2 million. That would simply finance the work in progress, the purchase of raw materials and so on. The hon. and learned Member for Leicester, West seems to forget the effect that that has on the ability to invest in modern machinery and equipment.
It is no wonder that British industry was on its back when the Labour Government left office in 1979. The cost is far greater than the hon. and learned Gentleman seems to realise. He said that the cost of low inflation is too high.


It may be insidious and may not appear immediately on the surface, but in the long term, high inflation is the most damaging thing for any country's economy.
I regret that the Opposition have not taken this opportunity to explain how or whether they would tackle inflation. It is clear that the hon. and learned Member for Leicester, West does not regard it as a high priority. He spelled out what he sees as the damage brought about by trying to get inflation down. In the long run, every business in his constituency, as in mine, is severely undermined by a failure to bring down inflation and to keep it down.
Mr. Deputy Speaker, given my interest in small businesses, you will not be surprised to hear that I wish to refer to the contribution that small businesses make in terms of jobs, wealth creation and a broader tax base. As they grow in number, the revenue to the Exchequer grows and its ability to finance the many other things that we all want is stronger. The contribution of small businesses was not always as widely recognised. Those of us who, in the past, have played a role in reminding people of the value and importance of the contribution of small businesses are pleased to see that it is more widely recognised. All businesses, large and small, suffer from the effects of inflation. All incorporated businesses have benefited from the reductions in corporation tax introduced by the Government. That enables business to grow. However, those corporation tax cuts from 45 per cent. to 35 per cent. for large businesses and to 25 per cent. for small businesses do not apply to unincorporated businesses. My hon. Friend the Member for Cornwall, North (Sir G. Neale) said that this is a serious aspect of taxation, because while a small incorporated business pays corporation tax at 25 per cent. an unincorporated business pays at 40 per cent. Unincorporated businesses are the seed-corn of our future prosperity—the smallest businesses that have just started that are beginning to move, to be the springboard from which they grow—yet they must pay more tax. It is not beyond the wit of man, the Treasury and my right hon. Friend the Chancellor in the Budget to devise a means by which investment within an unincorporated business is allowed for tax. That would offset the disadvantage that they suffer under existing arrangements.
In the past two years, many small businesses have gone into liquidation, ceased trading or gone bankrupt. Many did so because they could not find the resources to offset the cost of inflation. I understand the complaints of the hon. and learned Member for Leicester, West because the businesses of my constituents have also gone into liquidation, but how often did they do so because they did not have enough money to finance the orders that they could get?

Mr. Radice: I remind the hon. Gentleman, who has been making an interesting speech, of the small problem for small businesses of very high interest rates. The hon. Gentleman would not be fair to his own case if he did not point that out.

Sir David Mitchell: High interest rates are the price that we must pay to reduce inflation, but once it has been reduced high interest rates will not continue. We have had a series of reductions in interest rates as inflation has come down, and as it lowers further more reductions will be made. I urge my right hon. Friend the Chancellor of the Exchequer not to forget the unincorporated business in his Budget.
The Chancellor has been more successful in squeezing out inflation than he has been given credit for. In January, inflation was recorded at 4·1 per cent., but that figure covers 12 months. Who would choose a map of where he has been to decide where he is now? If one looks at where my right hon. Friend is now and takes the figure for the past three months, one finds that, annualised, the figure is not 4·1 per cent. but only 1·5 per cent. The annualised figure for December to January shows a fall of 0·8 per cent. It is true that in the past 12 months we have had an increase of 4·1 per cent., but the reality is that the figure is now substantially lower. That is an immensely important victory, bought at, the hon. Member for Durham, North (Mr. Radice) will agree, a very high price. I hope that hon. Members on both sides of the House agree that, having paid that price and reduced inflation, we should not take the risk of overheating the economy again.
Finally, I wish to mention an aspect which I see as a uniquely British engine of inflation—house prices. As the economy picks up, there will be a substantial increase in demand—

Mr. Janner: When?

Sir David Mitchell: Hindsight is the only exact science known to man. Foretelling the future is more difficult. Leading economists who advise banks say that later this year the economy will pick up. I have no insider knowledge, except that the experts tell me that that is likely to happen. When it happens, as assuredly it will, one of the signs will be an increase in demand for housing. There is a pent-up demand for housing among young people who, when they obtain better work, will want to buy a house.
But if we do not increase the supply of land with planning consent, that increased demand for housing will send land prices up and, as it does so, it will provide additional collateral for people to borrow against the higher value of their house. At least one county planning officer believes that he can suspend the law of supply and demand in his county and that an increased supply of land will not help to keep the price of land down. That is a disastrous approach. I urge my right hon. Friend the Secretary of State for the Environment to play his part in this. Land worth between £1,500 and £2,000 an acre is, with planning consent, worth £300,000 an acre. That engine for inflation of short supply of land must not be let loose on the country as it comes to the end of recession and grows in prosperity in the years ahead.

Mr. Jimmy Wray: I have sat here all afternoon and I was disappointed by the way in which the Chief Secretary made his speech. He made it clear to Labour Members that he was not interested in getting inflation down. He said that bearing down on inflation was the cornerstone and responsibility of the Government. After the next election, it will be their tombstone.
I represent one of the poorest constituencies in Scotland. Unemployment is probably the highest in Britain, at about 24 per cent., although the Government estimate it at between 16 and 17 per cent. Other statistics tell a different story. At great length, the Chief Secretary went back to the 1970s, when inflation was 31 per cent. He did not remind the House that when the Labour Government left office inflation had been reduced to 7·8 per cent.
Despite all the revenue from Scottish oil, the Government have failed. It must be embarassing for them to have to defend the way in which they have treated the people of this country. The nation now realises the mistake that it has made and how it has been conned, tricked and lied to by Conservative Members. The Chief Secretary did not give the true state of the country. It is a matter not only of inflation—if it were, that would be easy to remedy—but of stabilising prices, which the Government have never been able to do.
Let us look at the state of the country as the Tories will be leaving it to a Labour Government. Inflation has reached 4·1 per cent. From 7·1 per cent. in 1979, it rose to a peak of 10·1 per cent. Should we really trust the Government when they say that they are going for zero inflation? What a piece of nonsense. Any economist will say that a country that aims for zero inflation should take advice and should probably aim for 1 or 2 per cent. to oil the machinery, but the Government have not taken advice from anyone.
The Minister failed to tell the nation how the Government lied in 1983 when inflation was 3·7 per cent. The Government said that they were tackling inflation and aiming for a zero rate, but that was when they were expecting to get re-elected. They had been back in power only two years when inflation increased to 7 per cent. Two years after they had been re-elected in 1987, inflation doubled to 8·3 per cent. Now, in 1992, the Government are hanging on until the last day and there are some faces that we shall not see again. I think that inflation will be trebled if the Conservatives are returned to power—it will go back to 9 per cent.
It was sad that the Minister mentioned Germany when he asked whether any Government had an inflation rate of 1 per cent. He knows that the slump in the German economy has been caused by the reunification of east and west.
He failed to tell the nation that, although inflation is still running at 4·1 per cent., food prices have increased this year by 4·5 per cent. Household services such as postage and telephone bills have increased by 7·8 per cent. and motor prices by 9·1 per cent. Unless the Government can tackle those problems, we shall fall further into a slump.
The Minister did not tell us about the underlying rate of inflation. In 1990, it was 5·6 per cent., but that was without the mortgage interest rate. In 1991, we had the highest inflation rate—5·9 per cent. —of the seven major western economies, including Canada, the United States, Germany, France and Italy, whose inflation rates were hovering at 3 per cent. and 4 per cent.
The Government talk about recession, but they are not interested in the state of the country. They created this recession—;that is the way in which they work. They are not interested in the people of this country—if they had been, they would never have allowed the country to get into such a serious state. It annoys me when a Minister defends the policy of a Government who are in ruins. We have the statistics, and the media are explaining them to the nation.
The Government hope that possibly by encouraging independence in Scotland they will be able to slip in the back door, but the Scottish people are a red-blooded nation, compassionate and caring. Do the Government

honestly believe that the Scottish people would allow the people of England, Ireland and Wales beside whom they have fought and died over hundreds of years to return the Conservatives to power? The Scottish people will vote Labour, and all the rhetoric about independence will go out of the window. A member of the Scottish National party said that we would have a Scottish army. Another said that we would have 50 embassies. But we have hundreds of embassies. We are international socialists.
Poverty and homelessness on the banks of the Clyde are the same as poverty and homelessness on the banks of the Thames, the Rhine or anywhere else, because Europe is uniting. There are now 12 countries in the European Community. Malta, Cyprus, Greece, Spain and Czechoslovakia are now joining it. The hon. Member for Cornwall, North (Sir G. Neale), who is no longer here, referred to the exchange rate mechanism. He said that institutions would withdraw their money from this country, but why will they do that when we are in the ERM?
The Government must get rid of the slums and the poverty that they have created in Britain—10 million people are living in poverty and 180,000 are homeless. If one goes to Centre Point in Soho, one can see the effect of the policies adopted by the Government. They took away income support from 16 and 17-year-olds. In that age group the homelessness rate has now risen to 77 per cent. That is proof of the Government's mistakes. We want a Government who are compassionate and believe in helping the poor, but this Government have failed to do that.
The Government believe in the hierarchy. They are now shouting about the minimum wage, but I did not hear them shouting about the wage increases for those in the hierarchy. Giving people £3·40 an hour means that those people can spend more. If they can spend more, there are more tax revenues and that in turn leads to increased growth. The way to get rid of inflation is to create jobs and to give people more so that they can spend more.
The mathematician on the Government Front Bench thinks that he is a comedian—does he think that he is as funny as Arthur Askey? He referred to Polly the Parrot. That is not the serious stuff that we shall accept from a Minister when the country is in crisis. The Government have been advised by economists that short-term policies will not work. We need long-termism to speed growth in gross national product and gross domestic product, but the Government have failed badly and stuck to high interest charges. The ideal inflation rate is 0 per cent.—in fact, it might be less than that.
We are worried about fraud and bias and the way in which the Government have conned the nation. My hon. Friend the Member for Derby, South (Mrs. Beckett) made it clear that the Government lied. They said that they wanted people to own their own homes. In 1987, that was the banner under which they fought. They said that every member of society should own his own home. People went to borrow money from the Abbey National and other agencies at a rate of 9 per cent. No sooner were they in their homes, putting on a light and later trying to get a night's sleep when the interest rates went up to 16 per cent. Some 70,500 people have been turfed out of their homes. What are the Government doing about that? Nothing. They have been told about it day in and day out, but they have done nothing.
There are 2·6 million unemployed people, and that is a lot of people. It is very sad when people in my constituency ask when the recession will end. I cannot tell them because we are in such a mess that it will take a long time to get us out of it. Some people in my constituency have never had a job. All that they wait for on a Monday morning is for the giro to come through the door. The only difference between grass and a giro is that, although both are green, one feeds the cattle and one feeds a human being. Some people will never get a job because they are over 50 or 60 and have never had a job under this Government. They have no chance of getting one. Consequently, repossessions take place every day.
Perhaps there are some hidden talents in the Government which have never come to light. They have had three shots and three Chancellors but every Chancellor has either given in or not done the job.
Let us consider the way in which the Government have treated the people of England and Scotland with regard to the poll tax. An extra £14 billion was thrown down the drain. It cost every poll tax payer an extra £178. Those are the hidden costs that no one talks about. The Government are letting the poll tax still run on. They could have abolished it already, but they did not because they knew that youngsters were not putting their names on the register and that there was an election coming up.
What the Government have done to this nation's utilities is a scandal. They have taken our prime resources out of the hands of the many and sold them off to the few. No wonder the senior citizens are shouting about surcharges of £190 at the end of the year, to be paid for out of their poor pensions. Naturally, they wonder what a Labour Government would do. A Labour Government would raise taxes to 50 per cent. for the very rich. It is surely better to tax high earners—those earning more than £30,000—than to give them scandalous rebates of £300 or £400. How could any human being do that? Conservative policy is to give the richest people tax relief. I wonder how Conservatives will explain to the nation why they have so badly treated pensioners, the unemployed and the poor people who have to pay 20 per cent. of the poll tax while they live on scraps. No decent politician would stand for that.

Mr. Rupert Allason: Would the hon. Gentleman support the Government if they introduced a generous scheme of rebates or discounts for those who live alone? When the council tax was introduced, Opposition Front-Bench spokesmen opposed the granting of such discounts to pensioners and others living alone, but would the hon. Gentleman support the idea?

Mr. Wray: Yes, we would support it—if the Government got it right. but they are giving rebates to millionaires as well. That is why we oppose the idea. We would certainly give rebates to senior citizens, and we are committed to increasing their pensions, for single people and for couples, by £5 and £8 respectively. That is not a lot but it is a start—it is more than the Tories ever gave them. We will also increase child benefit by a few pounds—the Government froze it for many years.

Mr. Thomas Graham: I am sure that my hon. Friend will agree that since the Conservatives came to power in 1979 Strathclyde has lost more than half its manufacturing jobs—166,000 of them. As a result, repossessions on an unprecedented scale have

been taking place in Scotland and our young people have had to go on to the streets because they have no homes —the Government have savagely reduced the money allocated to council houses and the number of available council houses. Does my hon. Friend agree that Strathclyde has suffered enough under this dramatically bad Government?

Mr. Wray: Yes. That is why business people in Scotland and England have been gathering in the past two or three months and saying that they would rather back a Labour Government with sound policies than a Government who do not believe in investing in manufacturing, training, technology or anything else.
I am grateful for having had the opportunity to speak in the debate.

Mr. Robert Hicks: The hon. Member for Glasgow, Provan (Mr. Wray) made a typically robust speech but I am not certain whether his agenda for a Labour Government necessarily coincides with the views of his Front-Bench spokesmen. It is not without significance that the hon. Member for Derby, South (Mrs. Beckett), when describing her interpretation of the sequence of events between 1974 and 1979, did not refer to the role of the International Monetary Fund in determining Labour's financial policies. It was a humiliating experience for this country when the IMF imposed conditions and restraints on us. I hope that that will never happen again, whichever party is in power.
The right hon. Member for Blaenau Gwent (Mr. Foot) mentioned the courtesies of this House. There have been few occasions over the years when he and I have agreed on the remedy for political or economic recovery for this country, but we have always agreed on the urgent need for our football team, Plymouth Argyle, to make an immediate recovery so as to avoid relegation from the second division this year.
No one should ever doubt the need to minimise the adverse effects of inflationary tendencies in the economy. At worst, inflation can devastate an economy and undermine the whole fabric of society. That was the worst experience of Germany after the first world war. Certain countries in the third world are experiencing similar phenomena now.
Under the last Labour Government we experienced inflation rates in excess of 20 per cent. My right hon. and learned Friend the Chief Secretary said that the average inflation in the five years of Labour control was 15 per cent. Due to the external influence of the IMF, restraints were introduced following the wages explosion under the auspices of the so-called social contract. It seems a long time since we went through that experience, but many of my constituents, especially the middle-aged and the elderly, remember the adverse effects. That was undoubtedly an unhappy period.
During a period of high inflation it may seem that people are superficially better off because of pay or pension increases, but we all know from personal experience that few people or businesses are better off. I offer two examples of this; they are of particular relevance given that we may be on the election hustings in the near future. During the mid-1970s, teachers were granted a significant pay increase following the Houghton review. That was to be welcomed; it was an acknowledgment of


the work that teachers undertook for society. But within a couple of years the positive advances represented by that pay increase were eliminated by inflation.
Secondly, the effects on people who depended on pensions and fixed incomes were striking. Like my hon. Friend the Member for Cornwall, North (Sir G. Neale), I represent a constituency in which more than 20 per cent. of the electorate fall into that category. I know from my constituency casework at the time how rapidly people's incomes were eroded in real terms. They retired on what they perceived to be a reasonable income, sufficient to maintain an acceptable standard of living. If their pensions, however, were not subject to automatic review —only a minority in those days enjoyed such pensions —they soon found themselves in genuine financial difficulties.
The Government have been right to concentrate on the need to keep inflation under control. There have been variations. At times during the past 13 years, we have been more successful than at others, but since 1979 inflation has averaged about 7 per cent., half the rate under the previous Labour Government.
As my hon. Friend the Member for Cornwall, North mentioned, especially since my right hon. Friend the Member for Huntingdon (Mr. Major) became Prime Minister, we have had to manage the economy against a difficult international background. We have had to take difficult and harsh decisions. It has not been easy for the country as a whole, but the present signs such as average earnings, the level of pay settlements and factory gate prices show that we have become more competitive and thus able to take advantage of any upturn that may occur in the level of world trade and economic activity.

Mr. Graham: Does the hon. Gentleman realise that this Government had an incredible windfall from North sea oil and gas, and from the money they reaped from privatisation? The hon. Gentleman referred to the period of the Labour Government when oil prices quadrupled and we did not have our own oil. We were forced into doing things that we would not necessarily have liked to have done. That was true international pressure. Although the Government have reaped the rewards of oil, gas and privatisation, we still have unemployment raging into the millions. How can the Government continue like that after 13 years?

Mr. Hicks: I know the relative impact made on the constituents whom I have represented while I have had the honour to be a Member of Parliament. I have been a Member of Parliament under two Conservative Governments. Some rather critical remarks were made earlier about the first Conservative Prime Minister under whom I served—the right hon. Member for Old Bexley and Sidcup (Mr. Heath). There is no doubt that when it comes to standards of economic management and to making the best use of the resources at one's disposal, this Government's performance, especially in the past 18 months or so, has been much better than before. I wholeheartedly support the decisions made in the past 18 months.
It has been suggested in the debate that, given the more favourable climate, encouragement might be given in certain sectors to stimulating the level of economic

demand without prejudicing the inflation position. Several of my colleagues have made suggestions to my right hon. Friend the Chancellor of the Exchequer. May I suggest three areas in which a modest boost might be given which, in my view, would not jeopardise the Government's counter-inflation strategy? I do not refer to tax cuts because I am not convinced that that is the best way forward now.
First, we must consider carefully a relaxation of the restraint on local authority capital receipts for low-cost social housing and other specialist housing, such as that for the elderly, for the disabled and for the single homeless. If that could be accompanied by a relaxation of the conditions governing eligibility for home repair and improvement grants, it would be helpful for the housing and construction industry and it would have an immediate, beneficial effect.
Secondly, we must resolve once and for all the procedures governing payments to this country from European regional development fund sources. There is still confusion. In the Plymouth travel-to-work area, of which my constituency is a part, there is still uncertainty about whether we shall be able to take up the full allocation under the RENAVAL programme. At present, we have been able to take up only £3·5 million of £11 million. That has still not been confirmed.
Thirdly, many references have been made to the pressures currently placed on smaller business enterprises. If there are surplus funds at the disposal of the Chancellor, there is a strong case for easing the financial overheads placed on the smaller business units through a freezing of this year's projected increase in the level of the uniform business rate. If hon. Members, whether Opposition Members or Conservative colleagues, are criticial of me for suggesting that, I respectfully remind the House that I was the Conservative Member who, when the uniform business rate was discussed in the House, tabled an amendment suggesting that the transitional period for the new arrangements should be extended from five years to 10 years. I could foresee the genuine problems that smaller business units would face in the short term as a consequence of what may well be a desirable, long-term objective.
I am certain that when we come to the crucial day, which may be sooner rather than later, the country will be in no doubt about the respective merits, based on actual performance, of the two major political parties. All Conservative Members have an obligation to ensure that my right hon. Friend the Prime Minister is returned not only with a majority sufficient to give him the ability to form a future Administration, but with a majority large enough that he does not have to worry about the position of the minority parties or about a hung Parliament.

Mr. Giles Radice: We have heard a characteristically attractive and honest speech from the hon. Member for Cornwall, South-East (Mr. Hicks). I am sure that he will forgive me if I do not take up all his points, although I will refer to one or two as I go along.
When the Government chose to have a debate on inflation, I hoped that we should learn how a Conservative Government, if elected, would improve on their poor inflation record during this Parliament. I hoped that we should also learn how a Conservative Government,


committed to a balanced budget, would justify having a public sector borrowing requirement of more than £20 billion. I hoped that we should also learn how a Conservative Government would get us out of recession. We have heard none of that from the Chief Secretary to the Treasury. Instead, we heard a speech of astonishing vacuity and triviality—a speech almost empty of serious content.
Only a party facing defeat at a general election would have launched such a debate—and in such a manner. Only a Government without a sense of shame would have called a debate about inflation. Of course we all welcome the decline in inflation from its double figures high point in 1990. It certainly demonstrates the effectiveness of the exchange rate mechanism, which many of us have supported for a long time, or British membership of it, as a framework for reducing inflation.
However, the Chief Secretary failed to point out that the Government are responsible for putting inflation into double figures in the first place. As one of my colleagues asked, if the battle against inflation is so important for the Government, how come we have to win it twice?

Sir David Mitchell: Does the hon. Gentleman recall that, when the then Chancellor of the Exchequer was reducing interest rates and making credit easier, which caused the boom to which the hon. Gentleman refers and the inflation that followed, Labour and Liberal Front-Bench Members were calling for him to do even more? That would have stoked up an even higher rate of inflation and caused even worse problems.

Mr. Radice: I am about to refer to precisely that point. The hon. Gentleman has anticipated my next argument.
The right hon. Member for Blaby (Mr. Lawson) used to boast of bringing inflation down to zero, but that was before he and the present Prime Minister, who was then Chief Secretary, allowed the economy to become out of control during the 1987–88 boom. Everybody now agrees that that period was a disaster for the country. Some of us actually said so at the time. I do not want to quote myself, but I shall do so if the hon. Member for Hampshire, North-West (Sir D. Mitchell) wishes.
With respect to the hon. Gentleman, it is not just the mistake of reducing interest rates too sharply in the wake of the October 1987 stock market crash, as the Prime Minister suggested at Question Time yesterday. Many other countries did precisely that, but they then put up interest rates. A much more important factor was the unprecedented explosion of credit and borrowing which followed financial deregulation.
If the hon. Gentleman doubts me, I pray in aid the right hon. Member for Blaby, who said precisely that about a month ago. He pointed out that that was the major cause of what happened. That explosion of credit had the effect of inflating the house market, and it led to a splurge of consumer spending. It was an important factor.
Most objective commentators would agree that another major error was the tax-cutting budget of 1988, which reduced taxes by £6 billion and gave all the wrong signals to the consumer when the economy was already out of control. The result of those crass policy errors was a badly overheated economy, which led to soaring inflation and a record balance of payments deficit.
The Government also fail to point out—we heard nothing about it from the Chief Secretary—the other side

of the coin. They have managed to reduce inflation from its high point only because they have also created the longest recession since the 1930s, a recession which is still with us. I was amazed not to hear of that from the Chief Secretary. As we all know, GDP, excluding oil, has declined for six successive quarters since the second quarter of 1990. I hope that we hear less of the humbug about our recession being due to world recession. The Government know that that is nonsense, and they should stop pretending otherwise.
In March 1991, the Government, the Governor of the Bank of England and the Chancellor of the Exchequer admitted to the Treasury Select Committee that the British recession was home-grown. In answer to a question from me, the Governor of the Bank of England said:
The recession here is in response to what was undeniably an excessive growth in previous years and what might be called unilateral correction by us.
There was nothing about world recession.
The next day, even more significantly, the Chancellor, in answer to another question from me, said:
I do not think that there is a world recession. I think it is absolutely true that the main cause and origin of the recession is a response to the very fast growth which exceeded the underlying growth of capacity.
He did not blame a world recession; he said that it is a response to our getting the economy out of hand.
In short, our recession was not a response to world factors but was acknowledged, even by Ministers, to be "home-grown", a way of dealing with the inflation that they themselves had caused. It is clear what has happened to the British economy. To bring it back into balance, the Government put up interest rates to record levels. They relied entirely on interest rates because, for ideological reasons, they ruled out putting up direct taxes, as they were urged to do by many commentators.
Reliance exclusively on interest rates took a long time to work. It had malign side effects, particularly on the housing market and investment, and ultimately it plunged Britain into a very deep recession, with all that that means in lost output, redundancies, bankruptcies and rising unemployment.
The real question facing the House and the country is how we bring about a recovery without driving up inflation again. The Government spent more than a year saying that recovery was in sight—just around the corner. We were told that the economy would recover in a natural, cyclical way, as destocking ended and consumer confidence revived. Despite all the optimistic forecasts—many made to the House and to the Treasury Select Committee—and despite all the fine ministerial words, the recovery has simply not arrived. Indeed, Ministers have recently adopted a new formula. They say that the ingredients for recovery are now in place—whatever that means.
If we are to know what to do and if we are to have recovery without putting up inflation again, it is important to analyse what has gone wrong. We cannot blame the recent slowdown in the German and French economies for our own recession or for the slowness of our economy to recover. Indeed, our exports to the EC—we actually heard it from the Chief Secretary—have been one of the few success stories of the past year or so.
The key problem is the reluctance of the British consumer to spend, despite falling inflation and reduced interest rates. The Governor of the Bank of England is probably right to say that consumers


may be making attempts to reduce their existing debt holdings in much the same way that companies … have sought to reduce their borrowings.
In other words, consumers having taken on an excessive level of debt in the early 1980s—[Interruption.]— I wonder whether the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), who is speaking from a sedentary position, might listen, because it is a point that he knows very well—are understandably reluctant to take on new commitments. My conclusion is that we cannot, indeed should not, rely solely on the consumer to bring about recovery.
The Government also have a role particularly in fiscal policy, as the Treasury Select Committee has pointed out. In that connection, it has been hilarious to observe the Government, in their dying days, suddenly rediscovering Keynesianism. One would think that the so-called monetarist revolution of the early 1980s, which the hon. Member for Selly Oak opposed, had never happened. I feel quite sorry for some of the devotees of the medium-term financial strategy who are still stranded on the Conservative Benches.
Whatever happened to controlling the money supply? What about reducing public spending or reducing the public sector borrowing requirement? What about balanced budgets? All the things we used to hear about in the 1980s are a thing of the past. We are told, "Don't worry about it." Now we are told that the Government have decided to increase borrowing to pay for tax cuts —"borrowing billions to bribe millions", as my right hon. Friend the Leader of the Opposition has put it. That is deathbed Keynesianism with a vengeance. Indeed, it is living proof that, in Major's Tory party, electoral expediency always comes first.
I believe—here I agree with the hon. Member for Cornwall, South-East—that reducing the standard rate, as the Government apparently propose, is the least effective way of bringing Britain out of recession, and the most dangerous for inflation.

Mr. Anthony Beaumont-Dark: Will my hon. Friend, with whom I sit on the Treasury Select Committee and for whom I have great regard, tell us how increasing taxation on those we need to gear up the recovery will help the economy, them or the future Labour Government for which he hopes?

Mr. Radice: Our top rate of taxation is the lowest in the European Community. I believe that it is sensible for those who are well off to pay a fair rate of tax. I do not believe that they are doing so at present. I do not see any evidence that reducing taxes on the very rich improves the supply side of the economy. All the evidence is that they tend to do less work.

Mr. Beaumont-Dark: That is not an answer.

Mr. Radice: Well, it is an answer that satisfies me, even if it does not satisfy the hon. Gentleman.
Given the problem of personal debt—[Interruption.] I wonder whether I could hold the attention of the hon. Member for Selly Oak for a second—it will not necessarily be enough to encourage people to spend by reducing taxes. Judging from the continuing high figures for imports—despite the recession—even if they spend, much of the money which goes in tax cuts could leak away on foreign

goods. Using up public resources on tax cuts means that there is less money for other anti-recession measures and for investment in education, training and research and development—all important items. Above all, the recovery would be insecurely based and inflation-prone. If the recovery was based on tax cuts, it would be a recipe for another round of the stop-go to which we have become so accustomed under the Conservative Government.
If part of the objective is to increase consumer spending, and so bring about a sustained recovery, it would be far more sensible, as well as more socially desirable, to increase child benefit and pensions, as the Labour party proposes. In that way we could at least be certain that a good proportion of the increase would go directly into consumption.

Mr. Beaumont-Dark: Where will the money come from?

Mr. Radice: The hon. Gentleman asks where the money will come from. That happens to apply also to the Government, who propose to reduce the standard rate of tax and pay for it by borrowing. We cannot have any lectures from the Conservative party about financial rectitude when it has amassed such an enormous public sector borrowing requirement. The hon. Gentleman's point cannot be a serious one.
As my right hon. Friends suggest and as the Confederation of British Industry recommends, we will also need to give assistance to industry through investment incentives and the acceleration of infrastructure projects. At the same time, we must make an immediate start on investing in education, training and research and development, thus improving the supply side of the economy. As my hon. Friend the Member for Derby, South (Mrs. Beckett) said, we must look at both the demand and supply sides of the economy if we are to bring inflation under control.
If we are serious about reducing inflation and keeping it down, about creating a recovery and sustaining it and about looking beyond 9 April to seek a long-term future for the British economy, we will need a mixed set of objectives to emphasise not only control of inflation but sustaining growth, increasing investment and creating jobs. We will also need a mixed set of policy instruments. We cannot rely entirely on interest rates, as the Government have done.
Above all, we shall need a balance in the economy, which we have signally failed to achieve in the past five years. On their past record, we shall never obtain that from the Conservative Government. That is yet another reason why we need a Labour Government.

Mr. David Evans: I make no apology for taking a trip down memory lane, because there are many young people who will vote for the first time in the forthcoming election and I do not believe that they understand what the consequences of a Labour Government would be.
I agreed for once with the Leader of the Opposition when he admitted in one of his habitual gaffes that Labour did not have a clue how to tackle inflation. We certainly know that that is true. I am relieved to find that he and his party have finally come clean on the issue. Therefore, it is not surprising that he goes out of his way to avoid talking


about inflation. That probably comes as a huge relief to the right hon. and learned Member for Monklands, East (Mr. Smith).
Anti-inflationary policy is a clear indicator of a party's fitness to govern. Sound money lies at the heart of a stable community. It determines whether a Government can produce the conditions for prosperity or must break their promises. That is why any debate on inflation will quickly spill over the narrow confines of economic theory. Its scope is far wider than that. Inflation is a scourge which harms senior citizens, mortgage payers, people on fixed incomes and especially those with savings. It undermines our ability to export and create long-term employment. Real jobs come from making things that people want to buy at the right price.
Unit costs are paramount. That is something that the Labour party clearly does not understand. Simply to ignore the problem reveals at best a total lack of comprehension of the real world and at worst a gross dereliction of duty. I can think of no greater single threat to the general well-being of the British people than hyper-inflation.
The Government understand the aspirations of working people and business. That is why in the past 12 years we have made the battle against inflation our highest priority. That is why we have more people in work than ever before and why we have more small businesses than ever before. We have proved that economic growth in the United Kingdom can be based only on low inflation. That is why the United Kingdom grew faster than Germany or France in the 1980s. In the previous two decades, we had the slowest growth of the major EC countries.
If inflation goes unchecked, the achievements of British industry are continually undermined. For example, it has been estimated that each additional percentage point of inflation costs business £5,000 million a year—an unacceptable overhead over which the Government have direct control. If inflation is rampant, the confidence of industry is undermined and uncertainty spreads. As companies look no further ahead than the short term, they fail to invest in new jobs and equipment. They begirt to lose their competitive edge.
The Government have given firms the confidence to invest. Today, business investment is almost 60 per cent. higher than it was in 1981. Since 1979, it has grown faster in the United Kingdom than in France and Germany. Furthermore, interest rates rise with inflation. That reduces cash flow, particularly in small companies with a limited ability to borrow. Inevitably, people with mortgages are also hit.
Our membership of the exchange rate mechanism inevitably places constraints on the extent of interest rate cuts. We understand that. Nevertheless, since my right hon. Friend the Member for Huntingdon (Mr. Major) took over as Prime Minister, interest rates have fallen by 5·5 percentage points. Such truths appear self evident to Conservatives. That is why we have been so single-minded in our quest for low inflation. Labour is likely to have more success in the quest for the holy grail. The used and damaged goods which it palms off as economic policy would light a bonfire of inflation, which would become the funeral pyre of the British economy. In the 1970s, Brazil and the United Kingdom once again had two things in common—Ronnie Biggs and hyper-inflation.
Labour claims that inflation can be curbed by introducing credit controls, and that they should be used

rather than interest rates. Unfortunately, even after 12 years in opposition, they have not decided what form their credit controls would take. The hon. Member for Dagenham (Mr. Gould) has pointed out that, since 85 per cent. of personal credit takes the form of mortgages, credit controls would have to cover mortgage borrowing if they were to have any impact on overall levels of activity in the economy.
The right hon. and learned Member for Monklands, East disagrees. He wants to inhibit the banks' capacity to lend. It is self-defeating for anyone searching for an alternative to interest rates to argue for direct controls on the quality of money in the banking system.
The Opposition's policy would result in higher interest rates. That has always been Labour's way—it has tried, and it has failed. It is hardly surprising that Labour clings ever more tightly to the exchange rate mechanism. Its recent conversion is the product of blind panic rather than fiscal prudence. It sees the ERM as an answer to all its problems. It is an escape route from tough economic decisions. Someone should be kind and tell those on the Labour Front Bench that the ERM means being willing to accept high interest rates and limits on spending and borrowing—the two things that Labour Members and socialists have closest to their hearts.
Why are the Opposition shy about telling us what they would do if they were in government? If they are not going to devalue, interest rates would have to go up. We all know that that would happen under Labour. Why are Labour Members so shy about it? Why do they not come clean?
Aside from those examples of Labour's kamikaze approach to economics, I am concerned about their taxation rates. It is obvious, even to the most left-wing commentator, that, to meet its multitude of spending policies, Labour would have to increase taxes. The Oppositon have tried to hide that, just as the benevolent drunk buys a few drinks, but their multitude of policy documents remain full of expensive promises for every interest group under the sun.
Labour may no longer be a party of principle, but it is a party of priorities—literally dozens of them, £35 billion of them. The hon. Member for Copeland (Dr. Cunningham) has said that education is the first priority. The hon. Member for Cynon Valley (Mrs. Clwyd) has said that the United Nations aid target is a top priority. The hon. Member for Dunfermline, East (Mr. Brown) tells us that bridging the skills gap will be a priority. The right hon. and learned Member for Monklands, East thinks that growth in investment is the key priority. Labour politicians are reeling off the goodies like over-zealous games show hosts—£35 billion, £36 billion, and so the list goes on.
Treasury Ministers have rightly calculated that Labour's promises amount to an extra £35 billion in public expenditure. Everyone knows that that extra spending will be financed through higher direct taxation—through £20 a week in direct taxation on everyone earning more than £20,000 a year. Do Opposition Members think that 180,000 teachers earn too much? If they do not, why are they going to take another £20 in tax off them?
The Government are in a position to borrow because we have had the prudence to pay back £27 billion of borrowing since 1979. While our public sector borrowing requirement is 1·75 per cent. of GDP, Labour's reached a peak of 9·5 per cent. in 1975–76. It was robbing Peter to pay Paul.
I want my children to hear about the experiences of the 1970s, which show what happens when taxes increase, as they inevitably do under a Labour Government. I recall visiting a supermarket with my wife in the mid-1970s, looking for some Branston pickle. We could not find it because the front of the jar was taken up with price increases which had been stuck on. When we found it, my wife said, "Don't buy the first one, look at the back, because you'll find one cheaper."

Mr. Burt: Since my hon. Friend is taking a trip down memory lane, does he recall the days when there was an overwhelming smell of methylated spirits in supermarkets because the shop assistants were taking off last week's prices and putting on this week's? Does he not fear that that time will return?

Mr. Evans: My hon. Friend is right, although in my case they were not taking the prices off with methylated spirits but just sticking them over the old ones. One could not tell what the product was because so many price increases had been stuck on. If one shopped around for a while, one could cut a lot from the grocery bill by taking products from the back because the bloke had not had time to stick the new price on.
When employers grant wage increases that they cannot afford, they pass them on in higher prices; hence the Branston pickle. The result is a wage-price spiral that benefits no one, except ferry companies and airlines as people scurry to other countries where they can earn a living and not pay ridiculous rates of tax. Add to that Labour's plan for a national minimum wage. Can one believe it? Think of all the youngsters and women with families who want to work. Labour will do away with that, and the price of goods and unit costs will go up. Labour has no consideration for the nation, or for the millions of people who like going to work and like having a part-time job. It is total nonsense.
The Minister said last week that that might cost 100,000 jobs. I think that he has got it wrong and that the figure will be nearer 2 million.

Mr. Radice: Or 20 million?

Mr. Evans: Two million will do.
A socialist Government would hurt the very people it claimed to protect. The worst cruelty of the 1970s was that high inflation robbed pensioners of their lifetime savings. During the nightmare of the late 1970s, there was a 30 per cent. reduction in the value of their savings. It was not until the 1980s that they started to see a decent return on the money that they had spent a lifetime scraping together. I am sick and tired of the Opposition and of the bleeding heart tendency, who try to claim that the moral high ground belongs to them, while advocating policies which would hurt the people that they claim to respect—the unskilled and the low-waged.
When Labour Members were in government, they even resorted three times in five years to taking away the £10 Christmas bonus, yet they tell us that they will look after pensioners. They are going to give pensioners £5 or £8, but inflation will be ripping away at 27 per cent. They took Christmas pudding off the pensioners.
We have created conditions for lasting national prosperity. Since 1979, the average inflation rate has been

7·6 per cent., less than half Labour's comparable figure of 15·5 per cent. Our best figure has been 2·4 per cent.—Labour can only dream about that. The only time that the Labour Government invested in a space programme was when inflation went into orbit.
In August 1975, our inflation rate made us the sick joke of Europe. When I am at home, my children ask me, "Come on; what was Labour's highest inflation rate?" I say, "Have a guess." They say, "10 per cent." I say no. They ask, "11 per cent?" I say, "Sorry." They say, "12 per cent." [HON. MEMBERS: "Higher."] They say, "13 per cent." [HON. MEMBERS: "Higher."] They say, "It can't have been 14 per cent." [HON. MEMBERS: "Higher."] "15?" [HON. MEMBERS: "More."] "16?" [HON. MEMBERS: Morel They say, "Oh come on, dad; you've got to be joking. Was it 17?" (HON. MEMBERS: "More."]"18?" They say, "Make a cup of tea, mum, this is getting silly." When they get up to 20 per cent., they say, "Oh, it can't be true. This must be a joke you're telling us. 21 per cent? 22 per cent? 23? 24? 25? 26? 27? That's unbelievable." The truth is that it is a joke. Here we are now with an inflation rate of 4.1, and the Opposition are still not satisfied.
The current rate of inflation would have had Jim Callaghan and Denis Healey dancing above No. 10. Those two fiddlers on the roof staked their faith and reputation on the social contract, which, because of inflation and greed, was a disaster for this country. Who will ever forget Customs and Excise, railway men, tanker drivers, rubbish collectors and grave diggers going on strike because of greed and because inflation had overtaken them? They had to strike for more money. The National Union of Public Employees and the Confederation of Health Service Employees got the support services on strike. It was a nightmare: everybody was being blackmailed by the unions, the TGWU lot, with their beer and sandwiches in No. 10 at 11 o'clock every morning, when the chant was, "We want more, we want more."
The Chancellor left for Heathrow in his Jaguar, and on his way he found that the IMF, the official receiver, had arrived. It had come to run our country and to tell us whether we would be able to pay for this or that. The Government totally relinquished their responsibility and the IMF was in Downing street telling them how to run the country and look after our people. That is what happened when that lot were in power. The Chancellor finally told us why the IMF was here.
Our policies are tried and tested—and, just as important, we have had the courage to stick to them. In 1981, 364 economists told us that the recession would never end if we continued our policy of reducing inflation but we stuck to our guns and proved them wrong. In 1985, the raising of interest rates to 14 per cent. was highly unpopular, but we faced the unpopularity and inflation came down again. We have the stomach to take unpalatable decisions which will ultimately benefit the country, and we shall continue to do so.
Labour has seen the basis of its economic policy laughed out of every country in eastern Europe. To Labour, a credible economic policy means keeping the IMF out of the Treasury. That would be its sole ambition, so that the IMF was not telling a Labour Government what to do. What better example of that could there be than the right hon. Member for Leeds, East (Mr. Healey) being dragged back from Heathrow? Bookmakers say that they would rather offer odds on the prospect of night following day than on the likelihood of inflation going


down under a Labour Government. That is what is known as a racing certainty, and it is also a racing certainty that that lot will not get back into power.

Mr. Derek Enright: I shall continue the stroll down memory lane which was started by the hon. Member for Welwyn Hatfield (Mr. Evans). I recall the winter of discontent in 1978 and I remember my right hon. Friend the Member for Blaenau Gwent (Mr. Foot), who at that time was Leader of the House and the Member for Ebbw Vale, coming to the by—election at Pontefract and Castleford. We told him that I million people were unemployed and that the trade deficit was £500 million. We said that the average interest rate that year was 10.7 per cent., taxes were averaging 34.75 per cent. of people's wages and that 3,000 houses a year were being repossessed. We told him that those things were unacceptable and that we could not stomach them.
My right hon. Friend the Member for Blaenau Gwent is very wise and he said, "I agree, it is indeed bad. But if the other lot get in, it will be even worse." I did not believe him and I have suffered for that. The figures show that there are now 2.5 million unemployed people—1.5 million more than during the winter of discontent. The current trade deficit is £5.6 billion, 11 times what it was when Labour was in power. The average interest rate is 12.4 per cent., 2 per cent. up, and taxes average 37 per cent. of people's wages, almost 3 per cent. up. Worst of all, there have been 75,000 house repossessions. That means that 75,000 families are paying for the Government's ham—fisted attempt to deal with inflation.
Part of my constituency covers Wentbridge and cognoscenti on the Government side will realise that Wentbridge was the home of Anthony Barber. We all know about baby booms and we remember Barber booms. We recall what he did to the economy and what a Labour Government had to do to remedy that. We had to struggle when the price of oil quadrupled, but no Conservative Member has mentioned that. That price increase caused enormous difficulties, but in spite of them we were able to stay below the average rate of inflation in the European Community. That cannot be said of the past five years. Inflation in Britain has increased more than in any Community country. That is appalling.

Sir Gerrard Neale: Can the hon. Gentleman explain why, for the first time since the war, the United Kingdom has lower inflation than Germany and the lowest rate for many years?

Mr. Enright: I do not know where the hon. Gentleman gets his figures, but they are totally wrong. I shall give him some accurate figures on what the pound was worth in 1979 and what it is worth now. Conservative Members have spoken about printing money. In 1979 the pound was worth $2.12, but it is now worth $1.75—an 18 per cent. drop. In 1979 the pound was worth 465.57 yen, but it is now worth 225.5 yen—57 per cent. down. In 1979 the rate for the pound was DM 3·89, but it is now DM 2·88—a 26 per cent. drop. I do not wish to be unfair and admit that our economy has done rather better than some others, especially in terms of currency. Greece and Portugal are two countries that have done worse, and we could certainly look at countries on the west coast of Africa. I

congratulate the Government on managing to keep ahead of those economies. It is a pretty poor state when we have to boast of how well we do—

Mr. Radice: Does not what my hon. Friend has said give the lie to the Conservative party, which accuses us of always devaluing the pound? Since 1979, it is the Conservative Government who have considerably devalued the pound.

Mr. Enright: My hon. Friend makes the point with great clarity. The problem for the Government, which is shared by the Liberal Democrats, is that they take a one—dimensional view of the economy. There are no hues or shades; there is no four—sided consideration. The Government come up with one solution at a time. They cannot think laterally—they think in tidy lines.
I shall cite a good example of how the planning and the policy of the Government inevitably lead to inflation—inflation not just this year, but increases being stoked up for 20 years ahead. The Government take an accountant's view, year in and year out. They say, "Is there a little bit of profit this year? Jolly good, let's see if we can get one next year." They do not plan for five or 10 years ahead.
That lack of planning is clearest in the Government's energy policy. There used to be 12 pits in my constituency. I accept that a couple of them had to close because they were worked out—there is no argument about that—but other pits have 30 years' coal reserves. For reasons that I cannot understand, those pits are being closed. Perhaps it is ideology; perhaps it is an inability to think things through. We are gradually being left at the mercy of foreign fuels. We are not looking to the next century—yet, by then, coal will once again have overtaken all other forms of fuel as the principal factor in the production of the energy that we need. There has been no thought of that.
The Government say that they have spent lots and lots of money on the coal industry, and they have. I grant them that. However, that money has been spent not on keeping pits alive, not on clean coal technology and not on getting together with our European friends, but on closing pits and paying off men to get them out of work. We should think of the heedlessness of the Government's attitude towards those who have been made redundant, all in the so—called cause of bringing down inflation.
It does not matter whether those people used to work for the electricity boards or in the pits. Those people are, perhaps 50 and they have their pay—off of £40,000. That is not a lot of money on which to live; it will not do them a great deal of good. They get that money and they think that it will be a bit of a nest egg. They can get out of what is perhaps not a very good environment and they hope to start earning again—but no, they are not allowed on the Government's training schemes. Quite frankly, on some occasions I tell them that they are lucky not to be allowed on them. I can give an example from my constituency about those schemes. A gentleman who came to see me last weekend said, "I went on the training scheme and I was promised that I could train for a heavy goods vehicle licence, but I have now been with the firm for three months and I have spent that entire time delivering packages here, there and everywhere, in a little van on my own." The Government's training schemes are just cheap labour and the Government are subsidising that in different areas. It is appalling.
I prefer to call the minimum wage the just wage. When I was brought up in the Young Christian Workers, we talked about the need for a just wage. We talked unashamedly about the state having a part to play in a just wage—just as all the Christian Democrats on the continent believe. They are happy to accept a just wage. I would accept that challenge, too. Conservative Members know that if they visit a car factory in Germany on a Friday, the workers are not eking out the work to get overtime to help to pay the rent or to pay for a holiday. They say, "We are earning sufficient now. We are proud of our products and we are going to get on with producing them. We want to have as much free time as possible." They get the job done. That is what happens in a high—wage economy.
If we insist on having a low—wage economy, we will have low—value jobs and skills will be wiped out. That has happened. We who have relied upon the textile industry to provide jobs know that only too well. The multi—fibre arrangement was meant to be a form of work swapping. It was intended that people in the industry should move out of it and into high—tech industry so that poorer parts of the world could then develop their textile industries. What happened? Jobs were lost, but there was no positive planning by the Government to bring in new technology.
We know what the Government's policies are all about —they do not put them together. We cannot look at just one thing at one time; we have to deal with education, training, the health service and industry and develop them together. How to get the balance right depends on what is found in the books—and, quite frankly, I am terrified of what we will find in the books.
I want to say a word about the exchange rate mechanism. Both the Conservatives and the Liberal Democrats are rather taken with the ERM. I am sorry to attack the hon. Member for Berwick—upon—Tweed (Mr. Beith) in his absence, but he made certain comments about the ERM. I understand why he has had to return to his constituency; I am sure that my very good friend Gordon Adam will beat him at the next general election.
The ERM does not depend merely on interest rates. Nor, because we are in the ERM, are we so susceptible to the old so—called run on the pound. Conservative Members are living in the old days. The very fact that the new Labour Government will be in the ERM with a commitment, together with the rest of Europe, to bring in the social charter will bring the support that we need from the other members of the European Community. Our determination to do that, which was confirmed to me just a fortnight ago, already impresses people, not from the European Parliament, but from the other member Governments. I am proud of that.
When the Chief Secretary was talking about pretty polly parrots, he reminded me of the Greek story about Echo. She was a nymph who went to Hera, her mother —[Interruption.]

Madam Deputy Speaker (Miss Betty Boothroyd): Order. It is a historical story.

Mr. Enright: Echo went to her mother and told beautiful tales that entranced her. While she was telling the tales, naughty things were going on. Echo did not realise what was happening, and she kept on telling the beautiful tales and the naughty things kept happening. Hera said, "I

will punish you so that everything you say is mere repetition of the last thing said." I was reminded of that because the Chancellor of the Exchequer is very like that. If the right hon. Member for Finchley (Mrs. Thatcher) said, "Poll tax, poll tax", he said, "Poll tax, poll tax"—and then it went down to the Chief Secretary. Every little twist and turn in policy has been followed slavishly. Echo met her end when she encountered Narcissus—who fell in love with his reflection, jumped in the water and drowned. That is what will happen to the Government—and the sooner the better.

Mr. Alistair Burt: I enjoyed the speech of my hon. Friend the Member for Welwyn Hatfield (Mr. Evans). He causes amusement among Opposition Members, but that is prompted more by worry than anything else. They know that my hon. Friend the Member for Welwyn Hatfield has his finger on the pulse.

Mr. Barry Field: He is the voice of Britain.

Mr. Burt: Just as my hon. Friend says. When my hon. Friend the Member for Welwyn Hatfield expresses in such clear terms his fears of how Labour would run the country, he knows that many are listening. The appropriate classical analogy is not with Hera but with Prometheus, who was chained to the rock, and every day had part of his liver torn out. That is what would happen to Britain if Labour took office.
I enjoyed the contribution of the hon. Member for Hemsworth (Mr. Enright), but I am sorry that the right hon. Member for Blaenau Gwent (Mr. Foot) is not in his place, for I enjoyed his speech also. He spoke of the knockabout nature of the speech made by my right hon. and learned Friend the Chief Secretary. One always knows when Labour Members are worried, because they refer to "knockabout". Last week, they referred to the speech of my right hon. Friend the Secretary of State for the Environment in those terms, but we all know how much damage it did them. It was a good speech.
Today, my right hon. and learned Friend did not make a knockabout speech but exposed the large gaps in Labour's policies for dealing with inflation. The hon. Member for Berwick—upon—Tweed (Mr. Beith) said that he did not expect to discover in today's debate further question marks over Labour's inflation policies, but did so.
The right hon. Member for Blaenau Gwent went wrong when he referred to the prostitution of this Parliament. That was over the top. The right hon. Gentleman saw his party, Government, and country bend over backwards to allow the trade union movement to take over. That was real prostitution, and the right hon. Gentleman should always remember that.
History teaches us much about the ravages of inflation on not only a country's internal economic development but relationships between nations as a consequence of economic decline and expansionism—with the aggressive nationalism that that often produces—but it is remarkable how little history has taught the British Labour party. Little attention is paid in its calculations to the effect of inflation on the future.
We can all be forgiven for imagining that inflation matters very little to Labour. It appears from today's


performance by Labour Front Benchers that they do not appreciate the importance of inflation, which is why they have no policies for dealing with it. As my hon. Friend the Member for Welwyn Hatfield said, that alone should disqualify Labour from ever holding office.
Inflation is arguably the biggest single threat to any economy. It devalues currency over a long period. thus affecting the competitiveness of nationally—based industries, as well as the savings of all—and especially of those on fixed incomes. Investment and savings are the key to this country's recovery from the present worldwide recession. Increasing competitiveness in industry has already been made possible by the Government over the past decade. Higher manufacturing productivity proves that, as does Britain's share of world trade in manufactures, which has increased for the third year in succession.
That performance is likely to improve only in a low tax, low interest rate, and low inflation economy. The raw material for capital investment in industry comes not from Government, as the Opposition so often suggest, but from savings—which are often derided by Labour as unearned income. Try telling those of our constituents who have worked hard all their lives to put a little money away that that is unearned income.
Labour makes no secret of its high taxation policies, regardless of the growing number of economic advisers who support the Government's contention that the way out of the present recession is to encourage lower taxation as a stimulus for industry and higher personal consumption. Labour's taxes on savings would damage the crucial raw material needed for industrial recovery. It is as if Labour was stuck in a time warp—in the 1960s and 1970s—when the world was a different place, and socialism was alive—if not particularly well—and stalking the world with its flawed economic analyses. The world has moved on, but Labour has not—and it persists in following policies that would fuel inflation and exacerbate recession.
Raised public sector expectations were the down fall of the last Labour Government, in the winter of discontent —and Labour is starting that whole process over again. One remembers training levies, interference in business, and higher interest rates. This afternoon, my right hon. and learned Friend the Chief Secretary described, analyst by analyst, the expected scenario of higher interest rates under Labour. He quoted the Confederation of British Industry's assertion that every percentage point increase in inflation rates adds another £5 billion to industry's costs.
A survey by The Financial Weekly found that 87 per cent. of fund managers believe that the Conservatives are better at controlling inflation and that only 3 per cent. backed Labour. In another survey, The Independent on Sunday found that only 5 per cent. of top business executives trust Labour to control inflation, while 91 per cent. distrust Labour's anti—inflation credentials. Those are the very people whom Labour expect to be in the forefront of recovery should it form a Government—but they have no confidence in Labour. Some recovery that would be.
In debating inflation on a larger scale, sometimes we forget to relate it to our constituents. Labour talks incessantly of the need to put money into public services, but appears to have forgotten the connection between that and the need to control inflation. My constituents have not. During the 1974–79 Labour Government, as inflation went through the roof and the country moved towards

bankruptcy and the International Monetary Fund, the Government had great plans for my constituency, as for many others. The effect of the catastrophic situation that Labour Government brought upon themselves turned those dreams to nightmares.
We saw first restrictions on local government finance. I quote from a 1975 circular entitled "Local authority expenditure: Financial Planning 1976–77". It required local government expenditure to go on standstill for the following year. Bearing in mind the rate of inflation then, standstill meant real reductions in expenditure. Paragraph 7 of that document stated:
But there will inevitably be a reduction in the standard of local services.
Paragraph 12 added:
Those local authorities that have already allowed children to be admitted full time to infant classes on reaching the age of 4 should review this policy in the interests of economy. Rising 5s should not be admitted unless they make no additional call on educational resources.
So much for Labour's current plans on nursery education for all. Labour promises, but it cannot deliver. That was the reality when Labour was last in government, and it would be the reality next time.
If that were not bad enough, I will describe the effect of the last Labour Government on Bury's health services. For the first time since the inception of the NHS in 1948, expenditure fell in my constituency between 1974 and 1979, by 2 per cent. The effect on services can be imagined. Capital expenditure plans were reduced, and the general hospital for which my constituents had long waited had to wait for a Conservative Government before it was built.
That is what inflation means in practice. If one lets the economy run into the sand, one cannot do what one has promised. Local authority and health services were badly neglected in my constituency. Labour cannot deliver the caring services that it is always talking about.
If the control and conquest of inflation in the past has had an effect on my constituency, I hope that, once we are through the present recession, firm control of the economy will have a beneficial future effect for not only my constituency but for the development of Conservative thought and policy as we head towards the year 2000.
In the past, I have made no secret of my concern about the fact that, from time to time, the Conservative party in government has become over—identified with an economic rigidity that extends far beyond its normal remit. The market philosophy, while of enormous benefit in its own sphere, can be inappropriate when applied to other aspects of life. I have always believed that economics is a good friend of Governments, but not always the best master.
Unlike the Labour party, the present Conservative Government have always understood that conquering inflation gives the firmest base to the economy. Only firm control of the economy gives a Government the opportunity to put into practice the other policies—the social policies—that are a necessary adjunct of any modern Government. In a sense, traditional Conservativism has seen off its greatest enemy: an outdated and fatally flawed socialist theory of both society and the economy. At the hour of its greatest triumph, however, it is important that modern Conservatism is not sabotaged by a laissez—faire market capitalistic model that would threaten to undermine the social consensus that has grown up in the United Kingdom.
In my view, that social consensus has much in common with the German social market philosophy. It recognises


the essentially free-market nature of capitalism, but it also recognises its limits, and its need to be controlled from time to time. If socialism is finally to be defeated, we must ensure that everyone in the country has a stake in what modern free—market economics can produce for the country as a whole.
That means that the next Conservative Government, as well as committing themselves resolutely to the firm control of inflation and the management of the economy, must ensure that they continue to strive for solutions to the major social problems of our time. They must be determined to make the reduction of unemployment a priority. They must be determined to break down further the apathy and inertia that can often blight the lives of many people on our public housing estates. They must continue the initiatives that are being launched by my right hon. Friend the Secretary of State for the Environment in relation to inner cities. They must continue, and intensify, their work in relation to the homeless, and must redouble their efforts to ensure that no one is left out of modern society because of lack of opportunity to improve educational skills, before and after leaving school.
The next Conservative Government must also continue to ensure that modern industrial society looks at the pollution caused by the processes of the 19th century with a 20th—century eye, so that growth and production are not incompatible with a high quality of life.
Many factors are needed to combat the social problems that affect not only this country, but many countries in modern society. One is the absolute determination and commitment of the Government of the day—and I am convinced that a Government led by my right hon. Friend the Member for Huntingdon (Mr. Major) will possess that determination. A second is the economic means to combat the problems—an economic base that can be achieved only through the firm control of inflation. I am convinced that only a Government led by my right hon. Friend can do that.
Labour's lack of consideration and understanding of those issues has damaged my constituents and the country in the past. We must ensure that it does not have the chance to do the same again.

Mr. Paul Flynn: The hon. Member for Bury, North (Mr. Burt) referred to the "prostitution" allegation made, quite fairly, by my right hon. Friend the Member for Blaenau Gwent (Mr. Foot). I congratulate the hon. Gentleman. On the last occasion when we spoke together in a debate, he took a courageous step by not supporting his party—the Government—and taking a stand on its atrocious decision not to back the timely, if overdue, attempt to ban the sale of tobacco products in Europe. The hon. Gentleman said no to that, and the decision fell in Committee.
If we are to discuss who is prostituted in the House, perhaps we should examine the difference between the two sides. Unlike many other Opposition Members, I am not supported or sponsored by a trade union, a commercial organisation or any other body. Unfortunately for Conservative Members, I believe that the Government's craven decision—which has since been reinforced—not to back the attempt to reduce the amount of smoking among

young people, when we know that the tobacco firms are deliberately concentrating their £100 million advertising campaign on the young, is largely due to the fact that Conservative Members have prostituted their position in the House.
The figures are telling. Although Conservative Members repeatedly speak of Labour Members' being in hock to the unions, the truth is very different. Only 17 Opposition Members are paid advisers to trade unions, and even if we include all the others with paid involvement, the total is only 14 per cent. As for Conservative Members, 85 per cent.—

Madam Deputy Speaker: Order. The hon. Gentleman is straying very far from the motion.

Mr. Flynn: I shall come back to the motion, Madam Deputy Speaker, but I think that the matter needs—

Madam Deputy Speaker: Order. I hope that the hon. Gentleman will come back to it immediately, because he is very far from it.

Mr. Flynn: This preposterous motion asks us to congratulate the Government on the terrible state in which we now find ourselves. The speech with which the Chief Secretary opened the debate began with a joke about a parrot and ended with a joke about a haggis; there was very little in between. In their pre—election tension—hysteria, even—the Government seem to feel that the answer to all their problems is to put on cheap vaudeville acts at the Dispatch Box: we were given another of those last week.
The Government have begun to believe their own mythology. The hon. Member for Isle of Wight (Mr. Field) talked, quite erroneously, about the difference between the interest rate in this country and that in Germany. What we have now is not the best interest rate in Europe, or among similar countries; we have just about got down to the average—but at what an enormous cost, in bankruptcies, soaring unemployment and the collapse of the housing market.
Only today, we have learnt from an authoritative organisation that 2.5 million households are struggling with debt. According to its report, many people suspected that that was so, but only now is the seriousness of the position recognised. At least one of the main determinants has been the Government's decision about the social fund, which meant that those in desperate need were given loans —or, if they could not repay such loans, received nothing. All those families have become caught up in a cycle of debt that overshadows their whole lives. Instead of living life to the full, they find that their every action and decision is determined by their debt level.
A new and vulnerable group of debtors created entirely as a result of the Government's policy are the 15,000 pensioners who have taken on home income bonds. One of the principal brokers of such bonds was the West Bromwich building society. They were sold in the atmosphere of euphoria that followed the 1988 Budget, when the banks were infected with the general mood of optimism. I believe that many of the bonds are fraudulent.
A typical example is a lady in my constituency. Her home was worth £47,000, and she took out a bond that was described to her as a high-interest bond. What she was not told was that it was a high-risk bond, and that the sum was on loan. That happened only two years ago. The lady


was in her early 60s when she took out the bond. If the debt continues until the year 2015, she will owe the building society £1·5 million. I believe that that is a fraud. Two years into the bond, that lady now finds that the value of her property has fallen from £47,000 to £40,000, and that her debt has increased to £35,000.
People who have been prudent all their lives, and have bought their own homes, have been offered such deals and have suddenly been faced with the dreadful prospect of homelessness and all that goes with it—for their local councils have no houses to put them in. The Government were responsible for the sudden boom in house prices. Their policies were responsible for the following loss in confidence. Conservatives have repeated their parrot cry tonight—it amounts to a mantra—that a Labour Government would lead to high taxation. It is one of the many myths that they put about. [Interruption.] Let me remind the hon. Member for Lancaster (Dame. E. Kellett-Bowman) who is making noises over there and who I am sure will be happy to intervene—

Dame Elaine Kellett-Bowman: I merely said that I do not think that people should risk it.

Mr. Flynn: Perhaps they should not have risked a Tory Government. It is because of what has happened under the Conservative Government—I shall be happy to give way to the hon. Lady if she can deny it—that we have the highest taxes that we have ever experienced.
The arithmetic stares us in the face. In 1979, total tax under Labour amounted to 34·25 per cent. It has now risen to 37 per cent. The Conservative party is the party of high taxes. What the Government have done, however, is to shift tax from the more visible area—income tax—and put it on to value added tax and national insurance, where the burden is less obvious. People are therefore less aware of the tax burden that has been imposed on them.

Dame Elaine Kellett-Bowman: The hon. Gentleman does not refer to what the Government did as a result of their tax policy. When we reduced the 98 per cent. tax rate that had prevailed under Labour, we encouraged energetic people to return to this country from abroad. Therefore, we increased the tax yield from a much lower rate of tax. If the Labour party were to get in, people would immediately flee this country and a lot of effort would be put into evading tax instead of into productive employment. We have levied tax from a vastly increased number of high earners. That has led to more money being put into the national health service, education and pensions. That is what we have done with the increased tax yield from high earners.

Mr. Flynn: I am grateful to the hon. Lady, but that is a different point. The Conservative party is the party of high taxes. They have increased national insurance from 6·5 per cent. to 9 per cent. and they have increased VAT from 8 per cent. under Labour to 17·5 per cent. Those are penal tax increases.
In a few weeks' time, the Labour Government will introduce fair national insurance rates. If a person is on an average wage of £13,000 to £15,000, he or she pays 9 per cent. in national insurance. If somebody is earning £76,000 —I understand that that is the Prime Minister's salary—he or she pays 3 per cent. If somebody is earning a salary equivalent to that of the editor of the Daily Express, which I understand is about £200,000, he or she pays less than 1

per cent. It is inequitable that the national insurance burden should fall most heavily on those on average or just below average wages. The next Labour Government will ensure that that tax burden is shared fairly and more evenly.

Dame Elaine Kellett-Bowman: Has the hon. Gentleman taken into account the fact that the recent pay settlement for teachers means that 150,000 teachers will have to pay an additional 9 per cent. in national insurance contributions? Is that not most inequitable? It will lead to a great many people deciding not to enter the teaching profession. Nurses, hospital workers and policemen will also be caught by the additional 9 per cent. national insurance contribution which forms part of the Labour party's policy. It is the only part of their policy of which we are absolutely certain.

Mr. Flynn: Once again, the hon. Lady repeats the mythology that is printed in the tabloid press. That is the tabloid version of what the Labour party will do. As for what has been referred to as tax on unearned income of £30,000, again there will be a levelling up. The tax system is unfair and inequitable. Does the hon. Lady believe that we should maintain a system that places the highest tax burden on the lowest earners? I am sure that she does not believe that we should.
Reference has been made to business failures. One of the saddest sights during the recession has been the number of companies going into liquidation. Inflation, the obvious reason, is not the main cause of companies going into liquidation. It is indefensible that the Government have failed to control the main cause of business failures in my constituency and many other parts of the country. I refer to the insolvency laws and the Government's failure to control those parasites in business who make a habit of going into liquidation.
I give as an example a company owned by Mr. Brian Walker in my constituency. Nine of his companies went into liquidation. Six of his factories caught fire. That gentleman has built up debts amounting to more than £1 million, but he would say that he has no debts at all: that only those companies had debts. As the debts are corporate, not personal, debts he can carry on and not be declared insolvent or be disqualified from carrying on a business. What both he and many other people do is form a company and run up huge liabilities. They then unload the assets of those companies into a lifeboat company, after which those companies are put into receivership. They then leave their debts behind them.

Madam Deputy Speaker: Order. I have to call the hon. Gentleman to order once again and remind him that he ought to look at the substantive motion and the amendment. I am not hearing very much about inflation from him at the moment. Perhaps he will come back to that.

Mr. Flynn: The subject of bankruptcies has been raised during the debate and—

Madam Deputy Speaker: Order. It may well have been raised, but not while I have been in the Chair. I am sure that the hon. Gentleman is not challenging my ruling on this matter.

Mr. Flynn: I would not dream of doing such a thing, but I am afraid that we have been the victim of the average chairmanship throughout most of the debate and I now realise that—

Madam Deputy Speaker: Order. I insist that the hon. Gentleman should now keep his remarks either to the amendment or to the substantive motion.

Mr. Flynn: Thank you, Madam Deputy Speaker.
The arguments about the rate of inflation advanced by those who sit on the Treasury Bench show a certain loss of memory. The speech of the hon. Member for Welwyn, Hatfield (Mr. Evans) was laced with stories gleaned, it appears, from Christmas crackers, which led to hysterical laughter from his hon. Friends. He did a pantomime turn on interest rates and the levels of inflation. It is right to point out to Conservative Members that there was a time, painful though it may be for them to remember it, when inflation rose to 22 per cent. under this Government. That was in May 1980. I see that the hon. Member for Canterbury (Mr. Brazier) is looking at me in astonishment. That was no joke. The rate of inflation was stoked up by the Government. Contrary to the promises that the Conservative party made in its election literature not to increase VAT, as soon as it got into power, it stoked up inflation by 4 percentage points.
The second boom, which led to another bust, was stoked up in 1988 by the totally irresponsible Budget of the right hon. Member for Blaby (Mr. Lawson), the previous Chancellor. The Chief Secretary to the Treasury said that he wanted credit for all that the Government have done. Perhaps in the reply to the debate the Government will tell us how much credit they claim for the position that we are in.
I gave them a model to work on. It was from a man greatly revered in the House by those on the Government Front Bench when they were all "Yes ma'am, no ma'am" Ministers and Sir Alan Walters was an adviser to the previous Prime Minister. His assessment was that the world recession was 30 per cent. to blame, as one would accept. It is more difficult for Britain to get out of recession because of the position in the rest of the world. No reasonable person would pretend that that was not the case. Sir Alan Walters said that the Government were mainly responsible for the recession. He apportioned the responsibility at 70 per cent. to the Government's mismanagement of the economy and 30 per cent. to the world recession.
I do not know whether those on the Treasury Bench wish to be more ambitious and claim even more credit for it, but it would be nice to know how they apportion blame in the argument about black and white—world recession and British recession. I know of no commentator who does not agree that the Government's policies are responsible. The hon. Member for Pembroke (Mr. Bennett) once criticised the right hon. Member for Blaby as the man who had got us into this mess. That was recorded in an early—day motion. If it is understood that the problems are the result of the actions and the unfortunate Budget of the right hon. Member for Blaby, why on earth do not Conservative Members recognise that?
We are told that unemployment is a price worth paying. That is nonsense. Even in the Government's fiddled figures there is enormous unemployment. For example, one lady works as a cleaner in the Palace of Westminster in the early

morning, at St. Thomas's hospital in the afternoon and occasionally in the evening in a hotel bar. She is one person receiving three low wages. According to Government figures, she is three people, because they count her three times in the employment figures. Again, the hon. Member for Canterbury looks astonished, but that is right. That is part of the mythology of the Government's figures. We have heard in the debate that there are more people in work than ever before. That is nonsense. There are more people in the job count, because many people are counted several times.
My right hon. Friend the Member for Blaenau Gwent made a telling speech. I shall end by reminding the House of what he said, because it was apposite. He quoted the words of Pope. We will be meeting in the House in a few months' time with many absentees from the Government Benches. My right hon. Friend said that we might well feel that the spirits glide here
And haunt the places where their honour died.
The motion is one without honour.

Mr. Conal Gregory: I wish to address the important subject of inflation from the historical perspective, its current relevance and in the context of the family and employment in York.
In the historical context, under the last Labour Government the average rate of inflation was 15.5 per cent. Sadly, as I think all economists, even socialist ones, would admit, inflation rose in 1975 to a peak of 26.9 per cent. I trust that that will go down in the history books and that we shall not see it happen again, even as a footnote. It was a real warning to the country.
The underlying rate of inflation in December was the lowest since 1969. Only a month ago, in January, the inflation rate was 4.1 per cent. As my right hon. and learned Friend the Chief Secretary said earlier, that is below the average for the European Community and for the OECD. Those welcome figures have been achieved against opposition by the Labour party and by the Liberals throughout. Every anti—inflationary measure taken by the Government has been opposed.
Inflation is not a significant part of current socialist philosophy. I followed with interest the party conference of the socialists in 1991. In the major speeches made on that occasion by the Leader of the Opposition, I could find no reference to inflation. That shows the interest of the socialists in inflation.
Rather than talk in the abstract, I should like to deal with how inflation affects one part of the economy. In that context, I shall take my constituency of York. Low inflation benefits the elderly, who were the subject of my maiden speech. The savings of the elderly now count for something, but they were eroded in times of high inflation. Those on fixed incomes, often forgotten by political parties, now find that their incomes count for something.
Mortgage payers, about whom we are concerned constantly, are purchasing their homes but there was a period of hyper-inflation—at over 26 per cent. under Labour—when it made no sense for people to take on that long—term commitment for 20 or 25 years. The Government, who have stood firm on the right of tenants to buy council accommodation, know that it makes sense for people to be able to develop that nest—egg and pass it on to future generations.
As regards exporters and their employees, the only opportunity for big international exporters such as Nestle, Rowntree, Terry, and British Rail Engineering Ltd. to develop a sound national base is to look further afield for markets, not just in Europe but worldwide. Those markets will be eroded if we have hyper-inflation at home. If we have low inflation, companies will not have to increase prices three or four times a year, with the consequent: high prices that have bedevilled us.
Employment has not been explored adequately in the debate. One praiseworthy aspect of low inflation is the numbers who have moved into employment. Since the last election, unemployment in York has been reduced by 24 per cent.
The fastest growth area of the economy, not only nationally but in York, is tourism. Because people have more money in their pockets as a result of low inflation, that disposable income can be spent on tourism.
Finally, employment in York has benefited from construction. When there is low inflation, it is worth while for companies to extend their properties, as has happened with General Accident, whose premises are close to the River Ouse. Because the company has additional responsibilities and has taken on additional employees, it has had to extend its building.
I contrast that good record with what would happen under Labour. Higher inflation is a concomitant of socialism and would come about through the artificial minimum wage. A number of economists have said—I believe that they are accurate—that it would raise prices by 3·5 per cent. over three years. Higher inflation would also be caused by the social charter. That is Euro-speak and Euro-engineering. The training levy proposed by the Labour party would add significantly to inflation. Higher state borrowing would require private companies such as those I have mentioned as well as those in the state sector to increase inflation. Higher interest rates would result.
I must draw to the House's attention the unrealistic hopes of the public sector. The Association of Locomotive Engineers and Firemen and the union that used to be known as the National Union of Railwaymen, both of which are well represented on the Opposition Benches, have expectations way beyond the level that could be paid for by British Rail or by the users of British Rail. Those artificial expectations would be raised under a socialist Government.
Also, the red tape, especially in employment matters, caused by the Opposition's proposals would strangle business and would increase costs. The black economy would also be encouraged. People would think that there was little point paying one's full taxes if there was high inflation. The black economy would rise to monumental proportions.
I shall try to be as charitable as I can, but the socialists believe that there should be a wider public sector, and that through that there would be a larger economy. In fact, it would simply mean that costs would rise artificially and excessive spending would lead to increased inflation.
In contrast, the Conservatives have safeguarded public services. For example, from 1964 to 1970, investment in the railways fell by 57 per cent. in real terms under a Labour Government. It rose by 48 per cent. under the Conservatives from 1970 to 1974. It rose by only 13 per cent. under Labour from 1974 to 1979, and it has increased

by a staggering 55 per cent. in real terms since 1979. Therefore, we can have low inflation at the same time as good services.
If the Labour party is to safeguard the economy by borrowing, it would have to sell gilt-edged securities at a high level. That would raise inflation. It would also increase taxation. I hope to hear from the Opposition Front-Bench spokesman that the Opposition's proposals would mean raising the basic rate of tax by 10p or 15p, abolishing the ceiling on national insurance, raising the top rate of income tax back to 50p in the pound and reducing the value of many tax reliefs and allowances, as well as imposing a swingeing 9 per cent. surcharge on savers. The Labour party believes that high wages would restore living standards. In fact, they would lead to higher prices—

Mrs. Beckett: I am sorry that I have not had the pleasure of listening to all the hon. Gentleman's speech, but I am struck by his remark about a swingeing 9 per cent. surcharge on savers. I am sure that he will be aware that what we propose is a 9 per cent. charge on investment income above £3,000 and on investments per person at well over £30,000. I am sure that he was a Member of the House when, in 1988, the Government withdrew all help with housing costs from those with capital of £8,000. Today, help with housing costs is lost to those with capital of £3,000 per unit—that could be a couple. In other words, the hon. Gentleman was a Member of the House when the Government really penalised small savers, who have to be those on the lowest incomes or they would not be eligible for consideration in these matters. So we do not need any lectures about penalising savers from the hon. Gentleman.

Mr. Gregory: I am delighted that the hon. Lady has confirmed that there would be a tax of that nature on savers. She sidestepped the important point that high inflation under Labour eroded the value of people's savings by one third. I would not want to face the electorate of Derby, let alone York, with that appalling track record.
I should like to pursue this further, but time does not permit me. The important point is that Labour would continue to be the party of high inflation, which would affect the interests of the public sector and the vast majority of employers and employees. The defeat of inflation continues to be the core of the Government's economic policy, and in that way we shall ensure a sound and prosperous Britain.

Mr. Thomas Graham: Some time ago, I asked Ministers to tell us the price of certain basic foods, and none of them could do so. Can the Minister tell me the price of a pint of milk, a loaf of bread, a tin of beans or a 3 lb bag of potatoes? I should be delighted if he could do so. If he cannot, I must tell him that pensioners, the unemployed and everyone in the country has to purchase those goods to survive. If the Government do not know their cost, they should not be sitting here hypocritically debating inflation.
The Government's attitude to inflation worries me. Their methods of driving down inflation have put 3 million people on the dole. Not long ago, I spoke to a young unemployed man with a family of three. I asked him what was the most important consideration to him. He said,


"Obviously, Tommy, taking care of my family, ensuring that we can purchase our groceries, pay for heating and children's clothing and ensuring that our children go to school and are educated." Today that man needs a job. The Government are concentrating on low inflation, but they have thrown millions on the dole.
Inflation is important, but the right to a wage is even more important. I am convinced that the young family to whom I spoke would have liked to earn an average wage, even if it meant a 10 per cent. increase in inflation. I hope that the Minister understands that the right to work is an important part of the fabric of life in Britain. The Government have been so blinded by inflation that they do not see the realities of life. Their policies have driven people into the most abject poverty imaginable to mankind. Britain is supposed to be a high—technology country, but thousands of companies in Strathclyde have gone to the wall. Manufacturing industry has been decimated. In the Strathclyde regional council area alone, 166,000 manufacturing jobs have been lost—more than half its manufacturing base.
Those are mind-boggling figures, yet the Government, who tell us that they are concerned about inflation, are allowing our manufacturing base to go to the wall. If those manufacturing companies were kept open and their workers employed, perhaps we could have zero inflation. I agree with my hon. Friend the Member for Glasgow, Provan (Mr. Wray) that it is madness to go for zero inflation. The Government know what I mean by that, so I shall not spell it out.
For the past 10 years, the Tory Government have promised miracle after miracle. The only miracle is that they are still in office. Unemployment is 2.6 million—9.2 per cent. of the work force. Who do we blame when nearly 10 per cent. of our modern society's work force are unemployed instead of making this country a good and fit place to live? Who can believe that 9 per cent. of the work force are unemployed when our schools are falling apart, when there are pot holes in our roads and when hospitals are collapsing? We need regeneration to improve the fabric of our society. We need restructuring—now. After 13 years—

Madam Deputy Speaker: Order. I must call the hon. Gentleman to order. I refer him to the amendment and the motion, which deal with inflation. If he referred to inflation from time to time, he would keep himself in good order.

Mr. Graham: I take your point, Madam Deputy Speaker, but I am saying that although the Government are obsessed with inflation they are not tackling its root causes. They should ensure that Britain has better infrastructure and a manufacturing base.
I am sure that your house, Madam Deputy Speaker, is nicely furnished. Before furnishing a house, one must decorate the walls and ensure that the floor is secure, that there is water in the taps and that there is a bathroom to flush the waste away. What I am saying to the Government is that they do not have a bathroom to flush the waste away. There is no water to drink for refreshment and no electric current to get the nation going again.
The economy contracted by 2·5 per cent. in 1991—the worst calendar year since the depression of the 1930s. My

mother was unfortunate enough to be a young person in that depression in Scotland, but she remembers very well that when someone took ill the people in the close gathered up sixpences to pay the doctor, who came along and did the business. That was how society behaved in the depression of the 1930s.
The Government's drive towards private medicine is preventing many people from getting proper treatment, yet the Government think that inflation is the main problem. What they are doing to the country is savage. Manufacturing investment in 1991 was down 14 per cent. Britain is the only EC country where manufacturing investment is lower than in 1979. The sum of £30 billion in manufacturing investment has been lost because the Government have failed to make such investment at the same rate as Labour. Investment in the whole economy is down 11 per cent. In 1989, the Government spent 0·52 per cent. of the national wealth on civil research and development, compared with 0·92 per cent. in Germany, 0.86 per cent. in France and 0·66 per cent. in Italy. Since 1979, revenue from North sea oil has amounted to more than £100 billion.
Those figures are an indictment of the Government. They have squandered the revenue from North sea oil, which has been dug out in the most savage weather conditions by workers who have seen their compatriots thrown on to the dole. That revenue should have been spent on education, health, training and industry to get everyone back to work.
I ask the Minister to please stop squandering and privatising the nation's wealth. The public built the companies that the Government have given to their friends in the City. The general election will not be long. The time has come when the people of Great Britain want to take back what rightfully belongs to them, not to the Government's rich friends. We should be looking after people who are in need, in hospital and on the dole, and people who are unemployed and handicapped. The Minister should hang his head in shame. I have told him that until I am sick and tired—

Madam Deputy Speaker: Order. I have heard enough. If the hon. Gentleman will relate his comments to inflation, I shall listen. If not, he must resume his seat.

Mr. Graham: I have related my remarks to inflation. The Government have mismanaged the economy, inflation and every part of our society. I am delighted that it is not long until the general election when we can show them what is what.

Mr. Nicholas Brown: Not only are the Conservatives absolutely useless in Government but it is pathetically clear that they are not shaping up as very much of a parliamentary Opposition. They are struggling to get the hang of holding Supply days. They choose the wrong topics and the wrong decade. Government business managers have recently held Tory Supply days on taxation, privatisation, industrial relations, and now inflation. In his excellent speech, my right hon. Friend the Member for Blaenau Gwent (Mr. Foot) said that that was merely an election stunt but, having considered the topics that they have chosen to


debate on their four Supply days, it is clear that they are getting ready to fight the 1979 election rather than the one that is coming in a few weeks.
Do the Government want to debate the recession? We could talk about the longest and deepest recession for 50 years. Do they want to debate unemployment? We have experienced the highest rise in unemployment since records began. Do they want to talk about record mortgage repossessions, business closures, the lack of economic growth or rising crime? No, the Conservatives do not want to discuss those issues. Their choices for debate are tangential and even when discussing the topics that they have singled out for our attention, they spend most of their time attacking a fictional version of the previous Labour Government's record or an invented and highly speculative version of what they allege will be the next Labour Government's record.
Before dealing with current affairs, I must respond to the case made by Conservative hon. Members against the previous Labour Government. I have sat through most of this debate. Has anyone heard any Conservative hon. Member mention, let alone praise, Mr. Anthony Barber? My hon. Friend the Member for Hemsworth (Mr. Enright) remembers Lord Barber, the Tory Chancellor, whose monetary policies in 1972 and 1973 stoked up inflation for the incoming Labour Government. That incoming Labour Government inherited inflationary pressures in the economy from the Barber regime and then had to tackle the quadrupling of world oil prices.
The Labour Government cannot be blamed for Anthony Barber or for the quadrupling of world oil prices. The 1974–79 Labour Government deserve credit for getting inflation down to below the average of the Twelve in the European Community. As my hon. Friend the Member for Glasgow, Provan (Mr. Wray) said, they did not have the benefits that North sea oil brought to the Conservatives in the 1980s, yet Labour never had a manufacturing deficit. The Conservatives have had one every year since 1983.
Labour ran a higher annual growth rate of 2 per cent. compared with 1·75 per cent. under the successor Tory regime. Mortgage rates under Labour averaged 10·75 per cent. compared with the 1979–92 Tory average of 12·65 per cent., yet the Conservatives claim to be the party of the home owner and pretend that we are not.
Under Labour our share of the world's major manufacturing exports rose from 8·5 per cent. in 1974 to 9·1 per cent. in 1979. By 1984, the Conservatives had got that back down to 7.5 per cent. If investment in our nation's manufacturing base had continued at the same rate of growth as under the Labour Government an extra £30 billion would be invested in manufacturing industry in Britain today.
Instead, it is pitiful that manufacturing investment today is lower than when the Conservatives came to office. We should remember that all this took place under a Labour Government committed as a matter of policy to bearing down on unemployment. In 1979, Saatchi and Saatchi hired actors to pretend to be unemployed workers in a poster campaign with the slogan "Labour isn't working". There is no need to hire actors now. The Employment Gazette shows that—without exception—for every single year the Conservatives have been in office the annual average percentage rate of the work force unemployed has been higher than it was under the last Labour Government.
In 1979 the Tory election slogan implied that the Conservatives wished to reduce unemployment. What they have actually done is to maintain it at considerably higher levels every year for the past 13 years. Truly is it said that "Unemployment is nature's way of telling you that you voted Conservative"—

Sir Gerrard Neale: If what the hon. Gentleman says about the Labour Government at that time is correct, perhaps that would explain why there was a sterling crisis under that Government which forced them to devalue. Does the hon. Gentleman put it down to coincidence that both the Labour Governments before the one under discussion had sterling crises and had to devalue?

Mr. Brown: The hon. Gentleman is trying to rewrite the history of the last Labour Government. Conservative Members always try to depict that period as a grim disaster. It was nothing of the sort. There was much to praise in the last Labour Government's programme, especially given the problems with which they had to deal. The two major problems were inflation, which had been stoked up by the previous Conservative Government led by the right hon. Member for Old Bexley and Sidcup (Mr. Heath) and Chancellor Barber; and the quadrupling of world oil prices. How that Government conducted themselves must be seen in that context.

Mr. Radice: Is it not also true that since 1979 the pound has considerably depreciated against the dollar, the yen and the mark?

Mr. Brown: My hon. Friend, who made an excellent contribution to the debate, hits on a good point. Ministers do not come to the House and explain their depreciations of the currency. I recall the Prime Minister saying that the Government had no higher duty than to maintain the value of the currency; he did not go on to explain why he has not done that.

Mr. Maples: I am sure that the hon. Gentleman does not want to mislead the House about the exchange rates. The value of the pound against an average basket of foreign currencies is the same now in real terms as it has been for the past 12 years.

Mr. Brown: The Minister asserts that having first carefully picked his basket of currencies—without referring to the dollar, the yen or the mark, which would have constituted a more relevant comparison.
When discussing anything that has happened since 1979 it is official Government policy to blame someone else for the shortcomings of the past 13 years, but I did think it a little disloyal of the Secretary of State for the Environment to come to the House last week and to blame the rest of the world—in a much better speech than the Prime Minister would have made in similar circumstances. I hasten to add that I make no such charge against the Chief Secretary.
In the 1979 election manifesto, the Conservative party included a section sternly headed, "The control of inflation". It said:
To master inflation, proper monetary discipline is essential, with publicly stated targets for the rate of growth of the money supply. At the same time, a gradual reduction in the size of the Government's borrowing requirement is also vital.
The Conservatives, we note, did not mention a gradual reduction in the public sector borrowing requirement being vital over the cycle.
To the Conservative party led by the right hon. Member for Finchley (Mrs. Thatcher), a gradual decline in the PSBR was vital—full stop. History, alas, does not record whether the present Prime Minister and Chancellor of the Exchequer were dissenting voices in those days, but I suspect that they were not. I will lay odds—which would have been attractive to the hon. Member for Welwyn Hatfield (Mr. Evans) who spoke earlier—that the present Chancellor never had the nerve to say to the right hon. Member for Finchley what he said in Treasury Questions last November. When asked how he would pay for borrowing, he said:
We shall pay for borrowing by borrowing—that is the normal way in which one pays for it."—[Official Report, 28 November 1991; Vol. 199, c. 1062.]
I must try that out on my bank manager. I do not think that it will work with him and I am certain that it would not have worked with the previous Prime Minister. It shows how times have changed. We shall find out in a couple of weeks how that line is working for the present Prime Minister.
In its 1979 election manifesto, the Conservative party also said:
The state takes too much of the nation's income; its share must be steadily reduced. When it spends and borrows too much, taxes, interest rates, prices and unemployment rise so that in the long run there is less wealth with which to improve our standard of living and our social services.
The Conservative party then went on to do the opposite. It increased, not reduced, the share of the nation's income which the state takes, and it has maintained that increase for every year since 1981. By the summer of 1980, the Conservative Government had British inflation running at 21 per cent. The comparable average for the 12 EC countries was 14 per cent. Unemployment was high and rising. The Conservatives' response was to bring about the worst recession since the second world war.
In describing the 1st century Roman conquest of northern Britain, Tacitus said:
They created a desert and called it stability.
The Conservative approach to north Britain's industrial base has been similar. When Conservatives say, "Oh, the north has not been so much affected by our latest recession", they forget that the north has not yet recovered from the earlier one. The point was effectively underscored by my hon. and learned Friend the Member for Leicester, West (Mr. Janner).
By 1983, the Conservatives were telling us in their manifesto, under the heading, "Success against inflation", that
We shall maintain firm control of public spending and borrowing. If Government borrows too much, interest rates rise, and so do mortgage payments.
By 1987, in "We the People"—the right hon. Member for Finchley was using the royal "we" even then—the language had become far more robust. It was even slightly hysterical. The manifesto said:
Inflation is an evil. As with all cancers, it needs to be completely eradicated. To this end, we shall endeavour to achieve zero inflation.
Oh yes? In view of the Conservatives' previous methods, the more frightening question is "How?". The manifesto continued:
We shall maintain strict control of public expenditure and borrowing.

There is also a warning against
extravagant monetary and fiscal policies which would produce hyper—inflation and economic chaos.
I presume that the Chancellor and the Prime Minister have read that.
On the 1988 Budget and its aftermath, I will read to the House an extract from a candid article in an American magazine called International Economic Insights. There are more economic insights in the article than we ever get from the Government in the House of Commons. The article, referring to the 1988 boom and its aftermath, says:
In the latter stages of the boom, however, it was becoming clear that macroeconomic discipline …was being threatened by one of the government's microeconomic reforms: deregulation of the financial sector.
This is very honest stuff. The article continues:
There was an explosion in bank lending in the late 1980s which sent broad money growth soaring into the high teens. That unleashed a boom in asset prices, particularly houses, which generated an unprecedented and unsustainable surge in consumer spending. Government macroeconomic policy then turned to the task of curbing the inflationary consequences of that boom. The main policy instrument was high interest rates"—
as we all know. The article then says:
Clearly, the reduction in inflation has not been painless." The people who said that the reduction had not been painless might have thought of that before they allowed it to be stoked up.
The article goes on to state:
we have had to forgo some output as a price for eliminating its inflationary consequences.
Quite. The author, our own Chancellor of the Exchequer, clearly accepts on the Government's behalf both the blame for the problem and the responsibility for the chosen remedy. In order to bear down on inflation, the Conservatives have engineered in this country the worst recession since the 1930s. They do not know when it will end. Last summer, the Prime Minister told us that
Britain's position is strengthening month by month.
It was not. The Chancellor, last May, said:
Things are starting to go rather well for the economy.
They were not. Later, the Chancellor told us that
The green shoots of economic spring are appearing once again.
That is a poetic image. It turned out to be not so much the
Darling Buds of May" as the "darling buds of maybe".
The reason that the green shoots of economic spring are not coming through is, of course, that both the Chancellor and the Prime Minister have been talking to the plants. The Chancellor clearly repeats over and again that
Rising unemployment and the recession have been the price that we have to pay to get inflation down. That price is well worth paying.
The Prime Minister drones on at the poor little green shoots of economic spring, saying:
Inflation must go. Ending it cannot be painless. The harsh truth is that if a policy isn't hurting, it isn't working.
No doubt he was half remembering something that his mother told him as a child. In the circumstances, is it surprising that the green shoots of economic spring are not coming out of the ground? They want to be spoken to in a much more soothing manner, probably in a lilting Edinburgh accent.
In 1987, the Conservatives claimed their objective to be zero inflation, yet in 1987, 1988, 1989, 1990 and 1991 they could not even get inflation down to the EC Twelve average—something that the Labour Government managed to do in their last full year in office. That is not surprising, as, although they claim to be bearing down on


inflation, in a number of key areas the Conservatives were actually stoking it up. As well as VAT increases, to which successive Conservative Governments seem to be addicted, the poll tax made its unique contribution to our inflation rate.
As my hon. Friend the Member for Newport, West (Mr. Flynn) has pointed out, the Conservatives have also been at it with the public utilities. If one takes the cumulative change in the retail prices index from 1979 to 1981, one finds to one's surprise that the cumulative change is not zero but 135.4 per cent. That is from the party that has inflation as its priority. If one then takes certain public utilities and compares the inflation rate from 1979 to 1991 with the all-items rate—135·4 per cent., let me remind the House—one finds that electricity prices have gone up by 149·1 per cent., that gas prices have gone up by 167·7 per cent., and that telephone charges have gone up by 142–2 per cent., increases that were front-loaded in 1980 and 1981, with percentage increases of 28·2 per cent. and 23·5 per cent. respectively. Perhaps most obscenely of all, water charges have gone up by 265·3 per cent. from 1979 to 1991.
Why should all those items have price rises substantially ahead of the rate of inflation? What possible explanation could one seek? The explanation is pretty obvious. The Government intended to sell off those industries and ensure that the prices rose so that they could get a successful sale. Who pays the price for that successful sale? It is the consumer with Conservative-inspired inflation.
In the debate, Conservative Members asked what Labour would do. They always ask that when they can think of nothing to say. They do not listen or bother to follow the debate. They just say, "Well, what would Labour do?" If they had bothered to read the Labour amendment to the motion, they would see that we call on the Government
to introduce measures which include support for investment in manufacturing industry and in training, since without such measures inflationary pressures will simply re-emerge.
I am certain that that would be the case.
That policy, combined with our commitment to the exchange rate mechanism, seems to me a sufficiently substantial anti-inflationary policy. Let no one, absolutely no one on the Conservative Benches, try to peddle the misleading statement that the Labour party is not committed to playing its full part within the workings of the ERM and ensuring that it bears down on inflation. We were committed to the ERM well before it became fashionable on the other side of the House. We understand the disciplines that are involved.
However, it is not necessary to spell out from this Front Bench precisely which mechanism at which point in time a Labour Chancellor of the Exchequer would need to use in order to preserve our position. A series of options would be open to a Labour Chancellor, just as a series of options is open to a Conservative Chancellor. Conservative Members know that and know that we shall have a full range of options open to us just as they have a full range of options before them.
In drawing her excellent speech to a conclusion, my hon. Friend the Member for Derby, South (Mrs. Beckett) introduced a further quotation. I should like to refer to it again. But before I do so, hon. Members on both sides of

the House will be interested to hear the forecast from the National Institute of Economic and Social Research which was released earlier this evening. It predicts that
with a continuation of Tory policies unemployment will continue to rise throughout 1992 and 1993. Total investment will fall in 1992 by a further 1·3 per cent. After a fall of 15 per cent. in 1991, manufacturing investment will fall by another 4·9 per cent. in 1992 and that growth will be just 1·3 per cent. in 1992, well down on Norman Lamont's forecasts last November.
Those are the views of an independent institute. There is no recovery here. Indeed, the review comments:
There is little tangible evidence of any recovery in activity in the early weeks of this year.
I will treat the House again to the quotation that my hon. Friend the Member for Derby, South used earlier.
If we'd known how it would turn out, we wouldn't have done anything different.
Those are not General Custer's last words. They are the words of the Chancellor of the Exchequer explaining why the recovery did not come earlier, and, as we now learn, looks as if it will come substantially later, if at all, under the present regime. My hon. Friend the Member for Derby, South made the point that if we have to go through all this again, it is highly unlikely that our fellow citizens will vote to do so. I urge them not to.

The Economic Secretary of the Treasury (Mr. John Maples): The debate has been characterised by a variety of speeches. It is interesting that, although the opening and closing speeches for the Opposition had some interesting characteristics, and the last one in particular was amusing, neither made any effort to grapple with the issue of inflation or to state what the Labour party's policies would be.
My hon. Friends the Members for Hampshire, North-West (Sir D. Mitchell) and for Cornwall, North (Sir G. Neale) reminded us of the serious dangers of inflation to business. My hon. Friend the Member for York (Mr. Gregory) reminded us of the devastating effect that inflation can have on savings. My right hon. Friend the Member for Hertfordshire, North (Sir I. Stewart) pointed out clearly the weaknesses in the Opposition's policy. We were encouraged by my hon. Friend the Member for Kensington (Mr. Fishburn) to go for zero inflation. I am afraid that I missed the speeches of my hon. Friends the Members for Cornwall, South-East (Mr. Hicks), for Bury, North (Mr. Burt) and for Welwyn Hatfield (Mr. Evans), but I am told by my hon. Friend the Minister of State that they were worth reading, and I shall certainly read them.
I listened with interest to the hon. Member for Berwick-upon-Tweed (Mr. Beith). He is pretty tough on inflation—as tough as us, if not tougher. His intervention on the hon. Member for Derby, South (Mrs. Beckett) was interesting because she failed to respond to his invitation to say that Labour is serious about inflation.
My hon. Friends and I find that the appalling thing about this debate is having to take lectures on inflation from the Labour party. If one wants to know what will happen in the future it is sometimes interesting to look into the history books. I think that one Labour hero said, "There's no need to look into a crystal ball when you can read the book." The book does not read very well. During the period of the Labour Government, the average inflation rate in Britain was 15·5 per cent. and the average for the European Community was 12 per cent. During the


period of this Government, the average inflation rate in Britain has been 7·2 per cent., which has been the average for the European Community.

Mr. Allen McKay: The effect also matters.

Mr. Maples: Inflation is a bad thing. That may surprise the hon. Gentleman, but it is.
Under Labour, the highest rate of inflation was 26·9 per cent. and the lowest was 7·6 per cent. Under the Government, the average has been 7·2 per cent. Our average rate is lower than Labour's lowest rate.
During that time it is not surprising that M0 was growing at 12 per cent. a year, and public spending was out of control. That resulted in a letter that the then Chancellor of the Exchequer was forced to write to the International Monetary Fund—an interesting document for students of history. I doubt whether a British Chancellor has ever been forced to sign a more humiliating document than the letter that the right hon. Member for Leeds, East (Mr. Healey) had to write on 15 December 1976, asking the IMF for a standby agreement. Such agreements are usually given by the IMF to bankrupt Latin American countries. He had to apply for a substantial loan and, in the last paragraph of that letter, in effect he had to hand over the control of British economic policy to the president of the IMF.
We do not have much to learn from the Labour party about inflation, but the interesting question is: what has it learnt? The Labour party has had 13 years in which to reflect and to repent. It seems to me that those years have not been spent usefully.
In "Meet the Challenge, Make the Change" in 1989, there is a short paragraph of about 20 lines on inflation. It does not make any effort to say how to deal with the problem, but it contains this amazing, mind-bending sentence:
Inflation is in fact a complex phenomenon whose causes will vary from one situation to the next.
That is a facile cop-out because it does not say what one does to control inflation.
In 1990, the Labour party went further. In "Looking to the Future", the 1990 policy revision, there is a page on inflation. Again, there are no suggestions on how one would set about keeping it under control, but there is this amazing proposition:
We propose to develop regular discussions between government, employers, trade unions and others about Britain's economic prospects".

Hon. Members: What is wrong with that?

Mr. Maples: That is not a policy for dealing with inflation. It sounds to me and to my hon. Friends very reminiscent of beer and sandwiches at No. 10. With the new model Labour Treasury team, I suspect that it would have to be shellfish and champagne.
In 1991, "Opportunity Britain" went a little further, as it contained a paragraph headed "Monetary discipline". It is only a heading, it does not say anything about monetary discipline and it dismisses the use of interest rates, calling instead for the use of credit controls.
The subject of credit controls is interesting. I do not know whether Opposition Members have studied the remarks of the right hon. Member for Llanelli (Mr.

Davies), who has the advantage over all of them of having been a Treasury Minister for a few years. In June 1989, he was reported as saying:
The Labour Party idea that you should have credit controls is rubbish. There is no way you can control credit except by controlling the price of credit, and the price of credit is Bank Rates.
A couple of weeks later, on 18 June, the Leader of the Opposition said on "Panorama" that we need credit controls. Obviously, he had not read or digested those remarks. My right hon. and hon. Friends and I can forgive him. He has a little difficulty when he is let out alone, and we understand that. Perhaps the more honest comment came from him in that famous "World at One" interview with James Naughtie—[Interruption.] Opposition Members do not like it. We have the tape of that interview and it makes fascinating listening. When James Naughtie asked the right hon. Gentleman, "What would a Labour Government do to reduce inflation?", after having lost his temper and sworn a little he said, "To cut a long story short, we don't know." We know that he does not know, but it is a pity that some Labour spokesmen are not aware of that.
The debate about credit controls rumbled on. In October 1989, a few months after the remarks by the right hon. Member for Llanelli, the hon. Member for Dagenham (Mr. Gould) said in a Walden interview that a Labour Government would impose controls on mortgage lending specifically on people trading up. Of course he realised that if there had to be credit controls they would have to be on mortgage lending, which accounts for more than 80 per cent. of consumer borrowing. A week later the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) said that he strongly disagreed and that there was no way in which they would penalise a family who wished to buy a larger house. On that, as on so many matters, there is something of a muddle among Labour Front-Bench spokesmen.
We found especially interesting—this was brought out in the speech by the hon. Member for Derby, South—the fact that the key lever for controlling monetary policy and inflation is interest rates. It is the key lever used by all other members of the exchange rate mechanism, by the Bundesbank and by the Dutch and French central banks. It is also used by the Americans and the Japanese, but apparently we do not need to use it. We went through a ridiculous charade over interest rates and what has been christened Monklands law, which states that whatever interest rates are, they ought to be 1 per cent. lower. That was the case at varying interest rates last year.
The "World At One" is a dangerous programme for Labour's Front-Bench spokesmen because on that programme on 15 November last year the shadow Chancellor was asked by the presenter whether he would like the Government to make further cuts in interest rates. One would have thought that he would say 1 per cent. It had been 1 per cent. all year, so why should it be any different? However, the shadow Chancellor said:
I would have to take advice about it".
Apparently, he did not need any advice when he was calling for a 1 per cent. cut every two weeks during 1991, but by October he needed advice about it. Perhaps it is good that humility has broken in, because Monklands law was never a sensible policy. The shadow Chancellor's


attitude shows that Labour does not have a serious policy on inflation. It is not serious about interest rates and that shows that Labour is not serious about inflation.
The Labour party recently developed or found by accident a rather convenient fig leaf called the exchange rate mechanism. We are supposed to take seriously its commitment to the ERM, but it is rather difficult to take seriously a party that apparently cannot make up its mind about Europe. [Interruption.] Labour supported Britain's entry to the European Community in 1962, opposed it in 1964, supported it in 1966, opposed it in 1971, supported it in 1975, opposed it in 1983 and now Labour supports it again. Every single member of the shadow Cabinet who was in the House in 1972—I have the Division list here —opposed British entry to the Community in 1972 when the Bill on accession to the Community went through Parliament. The Division list contains the names of not only the shadow Chancellor but the Leader of the Opposition. In 1986—only five and a half years ago—14 members of the shadow Cabinet voted against the Single European Act. By chance, I have the Division list for that and among the names are those of the hon. Member for Derby, South and the right hon. and learned Member for Monklands, East (Mr. Smith). Over the past five and the next 10 years the key to the development of the European Community is the Single European Act and 14 Labour Members, including the two proponents whom we are now supposed to take seriously, voted against it. The 1983 Labour manifesto on which they all ran for election or re-election stated:
We will also open immediate negotiations with our European Community partners and introduce the necessary legislation to prepare for Britain's withdrawal within the lifetime of a Labour Government.
I have kept until last the words of the Leader of the Opposition. Apparently the keystone of the Opposition's policy on inflation is membership of the exchange rate mechanism. The attitude of leading Labour Members to the ERM and the European Community throws an interesting light on the question whether they can be taken seriously. As usual, the Leader of the Opposition is the somersaulter supreme on this issue. In 1975, in an article in Tribune, he said:
Only the EEC in its political and economic dimensions is the robber of the real sovereignty of the people".
In 1983—he had not changed his mind during those eight years—he said:
We want out of the Common Market.
In 1988, he had changed his mind. In The Independent on 4 February, he was quoted as saying these amazing words:
I have never seen hostility towards the European Community in the Labour party".
Where had he been? Obviously, he had not been listening to his right hon. and hon. Friends. What is more, he obviously had not been listening to himself.
During the short space of five years, the Labour party has moved from outright opposition to the European Community to fawning acceptance of anything that comes from Brussels. From the way in which Labour Members behave, one would think that Mr. Delors had a large block vote at the Labour party conference. We are supposed to take seriously that Damascene conversion by two or three Labour Members—[Interruption.] I am getting enough laughs.
Let us look behind those few members of the Opposition Front Bench whose word we have on that matter. Last week, we had a debate on the economy Four

of the eight Labour Back Benchers who spoke in that debate called for devaluation. That is hardly a ringing endorsement of the Opposition Front-Bench policy. In the debate on the autumn statement, 25 Labour Back Benchers tabled an amendment calling for full-blooded socialism. That is not even consistent with membership of the European Community, let alone the exchange rate mechanism.
What I and some of my hon. Friends wondered during that debate was how many more Labour Members thought the same and would have liked to sign that amendment. We suspect that it was the brave tip of a cowed and gutless iceberg—[HON. MEMBERS: "It is melting."] It is melting fast. The only reason why the Labour party decided to favour the ERM is that the party perceived differences of opinion within the Conservative party about it. When we shot that fox, Labour decided to favour economic and monetary union. Its policy has been driven by disingenuousness and opportunism.

Mr. Nicholas Brown: On the subject of disingenuousness and opportunism, I am sure that the Minister will recall that in the last three of the Conservative party's manifestos one of the key elements of its attack on inflation was its very tough strictures on borrowing. Is that still the case?

Mr. Maples: We shall continue to run a very responsible fiscal policy. We have always done so. I have just checked my copy of the Division list, only to find that the hon. Gentleman voted against the European Single Act. I thought that he might have been about to rise to tell us that we had been mistaken—

Mr. Brown: rose—

Mr. Maples: The hon. Gentleman has had his opportunity.
Labour's Treasury team has been investing a good many of its lunch hours in the City, trying to persuade people that Labour is now a reformed character and should be allowed out on parole. It would be interesting to hear what some of the City commentators have had to say about that. My right hon. and learned Friend the Chief Secretary pointed out that almost all of them thought that the advent of a Labour Government would bring an increase in interest rates. Some of them said that interest rates would go up, some said by 4 per cent., but none said that they would go down.
What about inflation? That is the subject of today's debate—[Interruption.] I am dealing with the Opposition's policy on inflation. I shall start with James Capel. Who had lunch at James Capel? Will nobody own up to that? James Capel estimates that under Labour, inflation typically would be about 2 per cent. higher. Goldman Sachs has predicted that inflation would be higher under a Labour Government. S. G. Warburg said:
the biggest flaw in Labour's approach concerns the absence of a credible strategy for tackling inflation.

Mr. John Smith: rose—

Mr. Maples: I am in the middle of a paragraph—[HON. MEMBERS: "Give way."] I shall do so in a minute. I am in the middle of a paragraph and I shall give way when I have finished it. UBS Phillips and Drew—

Mr. Smith: rose—

Mr. Maples: I am dealing with the City. When I have finished, I will give way to the right hon. and learned Gentleman.
UBS Phillips and Drew said that it was not yet convinced that the Labour party has successfully expelled its inflationary tendencies. I would be especially interested to know—and so should the Leader of the Opposition—who had lunch with UBS Phillips and Drew. Not only did they strike out on interest rates and inflation, they struck out pretty generally. The UBS Phillips and Drew briefing also said:
It is not hard to ridicule this pot-pourri of supply-side socialism: that unmistakable whiff of failed 1960s policies; the National Investment Bank, surely destined to retrace the history of the National Enterprise Board, picking losers.
Labour talks a lot about investment, but the investment made by its members in lunch hours does not seem to have paid off.

Mrs. Beckett: Has the Minister seen UBS Phillips and Drew's most recent report, which talks about a second Labour Government consolidating their position after a second election victory?

Mr. Maples: That must have been written by someone else. I quote again:
A pot-pourri of supply side socialism: that unmistakable whiff of failed 1960s policies".
I quoted only about six of the 22 comments that I have before me—none of which is favourable.
Labour has not only failed to convince the City—

Mr. John Smith: The Economic Secretary made a point of quoting Goldman Sachs, to which Conservative Members constantly refer. Did the hon. Gentleman read a day or two ago that the Government's given explanation for the recession—international factors—was described as eyewash by Goldman Sachs? If the Minister believes Goldman Sachs in one instance, why does he not believe it in another?

Mr. Maples: I do not believe anybody on everything, but Goldman Sachs' chief economic adviser has been a consistent supporter of Treasury policies throughout the past 18 months. Goldman Sachs says that, under Labour, interest rates and inflation would increase, and it does not make any very polite comments about Labour policies.
The Opposition are in disarray over several of their policies, but nowhere more so than in respect of their policies on spending and tax. In 1989, the Leader of the Opposition promised:
At the time of the next General Election, we will set out the accurate costs of our manifesto proposals.
A few months later, the hon. Member for Derby, South said:
We will begin the detailed costing of the manifesto at the end of next year"—
that is, 1990. We did not get it, and in September 1991, we were told by the hon. Member for Copeland (Dr. Cunningham):
Detailed spending pledges will not be included in Labour's manifesto".
That must be one of the first examples of an election promise being broken before the election has even taken place.
We have done the Opposition's sums for them. We make the cost of their proposal £35 billion—or did. I cannot remember any specific pledges being denied but if any have been, we have no difficulty, because new pledges

are added all the time. I could ask my right hon. and learned Friend the Chief Secretary for confirmation, but I believe that the total now is £37 billion or £38 billion.
Under Beckett's law, the hon. Member for Derby, South says that those are not pledges but wishes and prayers. Let us examine a couple of them. In "Opportunity Britain", Labour states that it will increase overseas aid to 0·7 per cent. of GNP. That would cost £2·3 billion. The hon. Member for Derby, South says that is not a pledge, but in his speech to the Labour party conference last year the shadow Foreign Secretary confirmed that target, saying that that was a firm commitment, costed and clear. He pledged that a Labour Government would carry it out. Who are we to believe—the shadow Foreign Secretary or the hon. Member for Derby, South?

Mr. Smith: rose—

Mr. Maples: I have one more question for the right hon. and learned Gentleman to answer. "Opportunity Britain" stated that Labour
will increase the basic pension in line with prices or earnings, whichever is the higher".
The right hon. and learned Member for Monklands, East confirmed that at Labour's party conference, when he said:
Of course that Labour Government will restore the link between retirement pensions and earnings and prices— whichever is the higher.
Who are we to believe in that instance—the shadow Chief Secretary or her boss? The right hon. and learned Member for Monklands, East did worse. He produced a completely new spending pledge that was not even included in the £35 billion that I mentioned. On 30 December, he said on "World At One"—a dangerous programme for the right hon. and learned Gentleman:
I would release the capital sums which local authorities have at their disposal".
There is up to £8 billion of those. I do not know whether we are talking about £2 billion, £3 billion or £8 billion. However much it is, it is public spending and it is public borrowing.

Mr. Smith: rose—

Mr. Maples: The right hon. and learned Gentleman was not even listening when I made my last point, and I have given way several times to Opposition Front Benchers.
I have discovered the secret. I have discovered why the Labour party has difficulties with its arithmetic. Into my hands has fallen an interesting document entitled "The Way to Win: Labour's Campaign Handbook for the 1990s". It provides guidance for Labour candidates, and it contains an interesting section headed "Counting the Votes". I want my right hon. and hon. Friends to listen to this: why Labour has difficulties will be made clear.
The document explains:
You need to know how many votes you require to win.
That is pretty uncontentious, but it is a little more complicated than it sounds. The document continues:
For example, Constituency A has 65,000 voters. If the general election turnout is 75 per cent., then the total voting will be 48,750. If only two parties stand, you need 50 per cent. + 1 to win—24,375.
If Labour candidates are thought by the Labour party not to be able to add up to 25,000, it is not surprising that the Opposition Front Bench cannot make it up to £35 billion.

Mr. John Smith: The Economic Secretary referred to expenditure on overseas aid. Will he make it clear,


speaking on behalf of the Government, that the Government are reneging on their commitment to meet the United Nations target?

Mr. Maples: It is a long-term target, as we have made clear. [Interruption.] That is exactly the point. The shadow Foreign Secretary said that Labour would meet it in the lifetime of a Parliament: he said that a Labour Government would do it in five years. It is in a list of spending pledges.
I am glad that the right hon. and learned Member for Monklands, East intervened, because I am just coming to him. The right hon. and learned Gentleman represents the respectable face of the Labour party. He is not very consistent about the exchange rate mechanism or European monetary union; he does not have much of a policy on inflation. He ran on a 1983 manifesto. Nevertheless, he represents the respectable face of the Labour party. What we must ask ourselves is whether he represents anyone in the Labour party other than himself. From time to time, he represents his client down in Islwyn; but he certainly does not represent the parliamentary Labour party.
Recently, we have been entertained by a series of articles in the newspapers. They started in The Guardian —[HON. MEMBERS: "It is a Tory newspaper."] We are told that it is a Tory newspaper. We had the headline:
Curious case of the Scot on the rocks".
We learn that the right hon. and learned Gentleman is
not radical enough",
and
less clever than he thinks".
We read
Why the knives are coming out for John Smith",
and
Why the claws are out for John Smith".
I have quoted from only four of the many newspaper articles that have appeared over the past 10 days.
I originally thought that all this was because Labour Back-Benchers were upset about raising people's taxes if they earned more than £390 a week, or about the idea that raising income tax helped the country to get out of the recession. Then I realised that I had been very naive. The truth was revealed to me in one of the newspaper articles, in which it was made clear that nothing of the sort was the case—that we were seeing a jockeying for position for when Labour lost the next election.
That was set out very succinctly in The Independent on Sunday—not, I think, a supporter of the Conservative party—which stated:
More worrying for Labour is the most convincing theory, that last week's shenanigans constituted elaborate jockeying for the party leadership should Labour fail to become the government. Many within the party detect a pre-emptive strike to damp down Mr. Smith's chances of walking his way to the … leadership.
Not only is the right hon. and learned Gentleman not as clever as he thinks; he is not as popular as he thinks.
There are red lines on the carpet in the Chamber so that we cannot stick swords in each other's fronts. Perhaps we should arrange for a red line to be drawn behind the right hon. and learned Gentleman, to make sure that no one can stick a dagger in his back. I hope that it does not happen, but, if we were to find a dagger in his back, whose fingerprints would we find on it? Would they be those of one of the 25 signatories to the amendment to the autumn statement who want socialism, or would they be those of one of the 100-odd other hon. Members who would have

liked to sign it but did not? Or would they, perhaps, be those of an acolyte of the Leader of the Opposition, tired of having his economics corrected all the time?
Nor",
I read in The Independent on Sunday,
is his relationship with Neil Kinnock close, the Labour leader realising that his Shadow Chancellor does not admire his grasp of economics.
That must be the understatement of the year. Whatever the truth may be about the conspiracy against the right hon. and learned Gentleman, he has been seriously wounded by it. He does not have the confidence of his own party, so how can he expect to have the confidence of the nation?
Let me now turn to the hon. Member for Derby, South, the junior partner in this Bearnaise sauce circuit around the City. She likes to pose as a paragon of fiscal virtue. I hope that this is not an indelicate subject to raise in the House, but this is a lady with a past—a very disreputable past. She used to be a socialist. That is no longer fashionable, so she denies it. She used to be very left wing. Ten years ago, she would have been the scourge of the policies that she now espouses. In the 1981 contest for the Labour party leadership, she supported the right hon. Member for Chesterfield (Mr. Benn). [HON. MEMBERS: "Oh!"] In 1980, this great supporter of the European Community wrote in Tribune about the European Community where she described it as
This selfish, greedy, little clique of countries
and declared:
none of the arguments for staying in the European Community can be sustained.
That is the same hon. Member who now lets Mr. Delors write her scripts. She is standing on her head on most of the issues that—

Mrs. Beckett: A couple of things have happened in the meantime that the Minister appears not to have noticed. First, we had a referendum on the European Community which was won by those people who wished to remain in the Community. Secondly, in the 1983 election campaign, the Labour party put a specific option before the country—that we should not remain in the Community. That option was rejected. I am a democrat. I accept the decision of the country. It appears that the Conservative party voted for the European Community and for the Single European Act but that it now wishes that it had not done so.

Mr. Maples: What intellectual rigour, what consistency of principle that can be so easily undermined. I suspect that it is the sniff of office, not the 1983 election defeat, that has brought about the change.
The hon. Lady is also the originator of Beckett's law, which is in tatters. She says one thing; the shadow Cabinet does another. We have already seen a few of the contradictions. The hon. Lady has no credibility and, apparently, no authority within the shadow Cabinet. She has got a £35 billion millstone round her neck and it is going to sink her. After the election, when the Labour party is in opposition, her job will be to run the shadow Chancellor's campaign for leadership of the Labour party.
I do not intend to dwell on the position of the Leader of the Opposition. He has changed his mind not just about a couple of things but about everything that he ever believed in. He used to be a famous left-wing firebrand. He has changed his mind about nuclear disarmament, nationalisation, Europe and even the monarchy.

Mr. Graham: Will the Minister give way?

Mr. Maples: No. I am not giving way to anybody else. There are only three minutes of the debate left.
It is difficult to take seriously anything that the Leader of the Opposition says. At the ad-men's bidding, he has given up the principles for which he went into politics and which he has held all his life. It shows through and is pretty shallow. The inflation record of the Labour party when in government was the worst in our history and the worst in the industrialised world. The Labour party has learnt nothing since then. It has no policy on inflation. It refuses to acknowledge that interest rates are the key to controlling inflation—in the words of the Labour party's own leader, when asked what Labour would do to control inflation, "We don't know."
The Labour party has had a sudden, opportunistic conversion to the exchange rate mechanism, but how can we believe its sincerity now when for years it castigated the very idea of Europe and when the whole shadow Cabinet voted against the Single European Act only five years ago? The Labour party has invested heavily in selling its new-found respectability to the City, only to have its policies comprehensively rubbished by City commentators. Labour would have had a massive public spending programme which inevitably would mean higher taxes. Beckett's law is in tatters, contradicted twice in a year by her own boss, the shadow Chancellor. If the shadow Chancellor does not have the confidence of his own parliamentary party, how can he expect to get the confidence of the country?
The Labour party is led by a man whose desperate thirst for office has led him to change his mind on everything he ever believed in, even the monarchy. He is the greatest imposter of them all. Labour has no policies on inflation and no credibility. It is running on the biggest false prospectus since the South Sea bubble and it will be rumbled by the electorate for its opportunism and insincerity.

Question put, That the amendment be made:—

The House divided: Ayes 188, Noes 324.

Division No. 100]
[10 pm


AYES


Adams, Mrs Irene (Paisley, N.)
Campbell, Ron (Blyth Valley)


Allen, Graham
Campbell-Savours, D. N.


Anderson, Donald
Canavan, Dennis


Archer, Rt Hon Peter
Clark, Dr David (S Shields)


Armstrong, Hilary
Clarke, Tom (Monklands W)


Ashley, Rt Hon Jack
Clelland, David


Ashton, Joe
Clwyd, Mrs Ann


Banks, Tony (Newham NW)
Cohen, Harry


Barnes, Harry (Derbyshire NE)
Cook, Frank (Stockton N)


Barron, Kevin
Cook, Robin (Livingston)


Battle, John
Corbett, Robin


Beckett, Margaret
Corbyn, Jeremy


Bell, Stuart
Cousins, Jim


Benn, Rt Hon Tony
Crowther, Stan


Bennett, A. F. (D'nt'n &amp; R'dish)
Cryer, Bob


Benton, Joseph
Cunliffe, Lawrence


Bidwell, Sydney
Cunningham, Dr John


Blair, Tony




Davies, Rt Hon Denzil (Llanelli)


Boateng, Paul
Davies, Ron (Caerphilly)


Boyes, Roland
Davis, Terry (B'ham Hodge H'I)


Bradley, Keith
Dewar, Donald


Bray, Dr Jeremy
Dixon, Don


Brown, Gordon (D'mline E)
Dobson, Frank


Brown, Nicholas (Newcastle E)
Duffy, Sir A. E. P.


Brown, Ron (Edinburgh Leith)
Dunnachie, Jimmy


Bruce, Malcolm (Gordon)
Dunwoody, Hon Mrs Gwyneth


Callaghan, Jim
Eadie, Alexander





Edwards, Huw
Marek, Dr John


Enright, Derek
Marshall, David (Shettleston)


Evans, John (St Helens N)
Marshall, Jim (Leicester S)


Ewing, Harry (Falkirk E)
Martin, Michael J. (Springburn)


Fatchett, Derek
Maxton, John


Faulds, Andrew
Meacher, Michael


Field, Frank (Birkenhead)
Meale, Alan


Fisher, Mark
Michael, Alun


Flannery, Martin
Michie, Bill (Sheffield Heeley)


Flynn, Paul
Morgan, Rhodri


Foot, Rt Hon Michael
Morley, Elliot


Foster, Derek
Morris, Rt Hon A. (W'shawe)


Foulkes, George
Morris, Rt Hon J. (Aberavon)


Fraser, John
Mowlam, Marjorie


Fyfe, Maria
Mullin, Chris


Galloway, George
Murphy, Paul


Garrett, John (Norwich South)
Oakes, Rt Hon Gordon


Garrett, Ted (Wallsend)
O'Brien, William


Gilbert, Rt Hon Dr John
O'Hara, Edward


Godman, Dr Norman A.
O'Neill, Martin


Golding, Mrs Llin
Parry, Robert


Gould, Bryan
Pendry, Tom


Graham, Thomas
Powell, Ray (Ogmore)


Griffiths, Nigel (Edinburgh S)
Prescott, John


Griffiths, Win (Bridgend)
Primarolo, Dawn



Grocott, Bruce
Quin, Ms Joyce


Hain, Peter
Radice, Giles


Hardy, Peter
Randall, Stuart


Harman, Ms Harriet
Redmond, Martin


Haynes, Frank
Rees, Rt Hon Merlyn


Heal, Mrs Sylvia
Robertson, George


Healey, Rt Hon Denis
Rogers, Allan


Henderson, Doug
Rooney, Terence


Hinchliffe, David
Rowlands, Ted


Hoey, Kate (Vauxhall)
Ruddock, Joan


Hogg, N. (C'nauld &amp; Kilsyth)
Sedgemore, Brian


Hood, Jimmy
Sheerman, Barry


Howarth, George (Knowsley N)
Sheldon, Rt Hon Robert


Howell, Rt Hon D. (S'heath)
Shore, Rt Hon Peter


Howells, Dr. Kim (Pontypridd)
Short, Clare


Hoyle, Doug
Skinner, Dennis


Hughes, John (Coventry NE)
Smith, Andrew (Oxford E)


Hughes, Robert (Aberdeen N)
Smith, C. (Isl'ton &amp; F'bury)


Hughes, Roy (Newport E)
Smith, Rt Hon J. (Monk'ds E)


Ingram, Adam
Smith, J. P. (Vale of Glam)


Janner, Greville
Soley, Clive


Jones, Barry (Alyn &amp; Deeside)
Spearing, Nigel


Jones, Martyn (Clwyd S W)
Steinberg, Gerry


Kilfoyle, Peter
Stott, Roger


Kinnock, Rt Hon Neil
Strang, Gavin


Kumar, Dr. Ashok
Taylor, Mrs Ann (Dewsbury)


Lambie, David
Thomas, Dr Dafydd Elis


Lamond, James
Turner, Dennis


Leadbitter, Ted
Vaz, Keith


Lewis, Terry
Walley, Joan


Litherland, Robert
Wardell, Gareth (Gower)


Lloyd, Tony (Stretford)
Watson, Mike (Glasgow, C)


Lofthouse, Geoffrey
Welsh, Michael (Doncaster N)


Loyden, Eddie
Williams, Rt Hon Alan


McAllion, John
Williams, Alan W. (Carm'then)


McAvoy, Thomas
Wilson, Brian


McCartney, Ian
Winnick, David


Macdonald, Calum A.
Wise, Mrs Audrey


McKay, Allen (Barnsley West)
Worthington, Tony


McLeish, Henry
Wray, Jimmy


McMaster, Gordon



McNamara, Kevin
Tellers for the Ayes:


Madden, Max
Mr. Jack Thompson and


Mahon, Mrs Alice
Mr. Eric Illsley.


NOES


Adley, Robert
Arbuthnot, James


Aitken, Jonathan
Arnold, Jacques (Gravesham)


Alexander, Richard
Arnold, Sir Thomas


Alison, Rt Hon Michael
Ashdown, Rt Hon Paddy


Allason, Rupert
Aspinwall, Jack


Alton, David
Atkins, Robert


Amery, Rt Hon Julian
Atkinson, David


Amess, David

Baker, Rt Hon K. (Mole Valley)


Amos, Alan
Baker, Nicholas (Dorset N)






Baldry, Tony
Fookes, Dame Janet


Batiste, Spencer
Forman, Nigel


Beaumont-Dark, Anthony
Forsyth, Michael (Stirling)


Beggs, Roy
Forsythe, Clifford (Antrim S)


Beith, A. J.
Forth, Eric


Bellingham, Henry
Fowler, Rt Hon Sir Norman


Bellotti, David
Fox, Sir Marcus


Bendall, Vivian
Freeman, Roger


Bennett, Nicholas (Pembroke)
French, Douglas


Benyon, W.
Fry, Peter


Bevan, David Gilroy
Gale, Roger


Biffen, Rt Hon John
Gardiner, Sir George


Blackburn, Dr John G.
Garel-Jones, Rt Hon Tristan


Blaker, Rt Hon Sir Peter
Gill, Christopher


Body, Sir Richard
Glyn, Dr Sir Alan


Bonsor, Sir Nicholas
Goodlad, Rt Hon Alastair


Boscawen, Hon Robert
Goodson-Wickes, Dr Charles


Boswell, Tim
Gorman, Mrs Teresa


Bottomley, Peter
Gorst, John


Bottomley, Mrs Virginia
Grant, Sir Anthony (CambsSW)


Bowden, A. (Brighton K'pto'n)
Greenway, Harry (Ealing N)


Bowden, Gerald (Dulwich)
Greenway, John (Ryedale)


Bowis, John
Gregory, Conal


Boyson, Rt Hon Dr Sir Rhodes
Griffiths, Sir Eldon (Bury St E')


Braine, Rt Hon Sir Bernard
Griffiths, Peter (Portsmouth N)


Brandon-Bravo, Martin
Grist, Ian


Brazier, Julian
Ground, Patrick


Bright, Graham
Gummer, Rt Hon John Selwyn


Brooke, Rt Hon Peter
Hague, William


Brown, Michael (Brigg &amp; Cl't's)
Hamilton, Rt Hon Archie


Browne, John (Winchester)
Hamilton, Neil (Tatton)


Bruce, Malcolm (Gordon)
Hampson, Dr Keith


Buck, Sir Antony
Hanley, Jeremy


Budgen, Nicholas
Hannam, Sir John


Burns, Simon
Hargreaves, A. (B'ham H'll Gr')


Burt, Alistair
Hargreaves, Ken (Hyndburn)


Butcher, John
Harris, David


Butterfill, John
Haselhurst, Alan


Campbell, Menzies (Fife NE)
Hawkins, Christopher


Carlile, Alex (Mont'g)
Hayes, Jerry


Carlisle, John, (Luton N)
Hayhoe, Rt Hon Sir Barney


Carlisle, Kenneth (Lincoln)
Hayward, Robert


Carr, Michael
Heathcoat-Amory, David


Carrington, Matthew
Heseltine, Rt Hon Michael



Carttiss, Michael
Hicks, Mrs Maureen (Wolv' NE)


Cash, William
Hicks, Robert (Cornwall SE)


Channon, Rt Hon Paul
Higgins, Rt Hon Terence L.


Chapman, Sydney
Hill, James


Chope, Christopher
Hind, Kenneth


Churchill, Mr
Hordern, Sir Peter


Clark, Rt Hon Alan (Plymouth)
Howarth, Alan (Strat'd-on-A)


Clark, Dr Michael (Rochford)
Howarth, G. (Cannock &amp; B'wd)


Clark, Rt Hon Sir William
Howe, Rt Hon Sir Geoffrey


Clarke, Rt Hon K. (Rushcliffe)
Howell, Rt Hon David (G'dford)


Coombs, Anthony (Wyre F'rest)
Howell, Ralph (North Norfolk)


Cope, Rt Hon Sir John
Howells, Geraint


Cormack, Patrick
Hughes, Robert G. (Harrow W)


Couchman, James
Hunt, Rt Hon David


Currie, Mrs Edwina
Hunt, Sir John (Ravensbourne)


Davies, Q. (Stamf'd &amp; Spald'g)
Hunter, Andrew


Davis, David (Boothferry)
Irvine, Michael


Day, Stephen
Irving, Sir Charles


Devlin, Tim
Jack, Michael


Dickens, Geoffrey
Jackson, Robert


Dicks, Terry
Jessel, Toby


Dorrell, Stephen
Johnson Smith, Sir Geoffrey


Dover, Den
Jones, Gwilym (Cardiff N)


Dunn, Bob
Jones, Robert B (Herts W)


Durant, Sir Anthony
Jopling, Rt Hon Michael


Dykes, Hugh
Kellett-Bowman, Dame Elaine


Eggar, Tim
Kennedy, Charles


Evans, David (Welwyn Hatf'd)
Kilfedder, James


Evennett, David
King, Roger (B'ham N'thfield)


Fallon, Michael
King, Rt Hon Tom (Bridgwater)


Farr, Sir John
Kirkwood, Archy


Favell, Tony
Knapman, Roger


Fenner, Dame Peggy
Knight, Greg (Derby North)


Field, Barry (Isle of Wight)
Knight, Dame Jill (Edgbaston)


Finsberg, Sir Geoffrey
Knox, David


Fishburn, John Dudley
Lamont, Rt Hon Norman





Lang, Rt Hon Ian
Shaw, Sir Giles (Pudsey)


Latham, Michael
Shaw, Sir Michael (Scarb')


Lee, John (Pendle)
Shelton, Sir William


Lennox-Boyd, Hon Mark
Shephard, Mrs G. (Norfolk SW)


Lester, Jim (Broxtowe)
Shepherd, Colin (Hereford)


Lilley, Rt Hon Peter
Shersby, Michael


Livsey, Richard
Sims, Roger


Lloyd, Sir Ian (Havant)
Skeet, Sir Trevor


Lloyd, Peter (Fareham)
Smith, Sir Dudley (Warwick)


Lord, Michael
Smith, Tim (Beaconsfield)


Luce, Rt Hon Sir Richard
Smyth, Rev Martin (Belfast S)


McCrea, Rev William
Soames, Hon Nicholas


McCrindle, Sir Robert
Speller, Tony


MacGregor, Rt Hon John
Spicer, Michael (S Worcs)


MacKay, Andrew (E Berkshire)
Squire, Robin


Maclennan, Robert
Stanbrook, Ivor


McLoughlin, Patrick
Stanley, Rt Hon Sir John


McNair-Wilson, Sir Michael
Steel, Rt Hon Sir David


McNair-Wilson, Sir Patrick
Steen, Anthony


Madel, David
Stephen, Nicol


Mans, Keith
Stern, Michael


Maples, John
Stevens, Lewis


Marland, Paul
Stewart, Allan (Eastwood)


Marlow, Tony
Stewart, Andy (Sherwood)


Marshall, John (Hendon S)
Stewart, Rt Hon Sir Ian


Martin, David (Portsmouth S)
Stokes, Sir John


Maude, Hon Francis
Sumberg, David


Mawhinney, Dr Brian
Summerson, Hugo


Mayhew, Rt Hon Sir Patrick
Tapsell, Sir Peter


Mellor, Rt Hon David
Taylor, Ian (Esher)


Meyer, Sir Anthony
Taylor, John M (Solihull)


Michie, Mrs Ray (Arg'l &amp; Bute)
Taylor, Matthew (Truro)


Mitchell, Andrew (Gedling)
Taylor, Sir Teddy


Mitchell, Sir David
Tebbit, Rt Hon Norman


Morris, M (N'hampton S)
Temple-Morris, Peter


Morrison, Sir Charles
Thompson, Sir D. (Calder Vly)


Moss, Malcolm
Thompson, Patrick (Norwich N)


Neale, Sir Gerrard
Thornton, Malcolm


Needham, Richard
Thurnham, Peter


Nelson, Anthony
Townend, John (Bridlington)


Neubert, Sir Michael
Tracey, Richard


Newton, Rt Hon Tony
Tredinnick, David


Nicholls, Patrick
Trippier, David


Nicholson, David (Taunton)
Twinn, Dr Ian


Nicholson, Emma (Devon West)
Vaughan, Sir Gerard


Norris, Steve
Wakeham, Rt Hon John


Onslow, Rt Hon Cranley
Waldegrave, Rt Hon William


Oppenheim, Phillip
Walden, George


Page, Richard
Walker, Bill (T'side North)


Paice, James
Walker, Rt Hon P. (W'cester)


Parkinson, Rt Hon Cecil
Wallace, James


Patnick, Irvine
Waller, Gary


Patten, Rt Hon Chris (Bath)
Walters, Sir Dennis


Patten, Rt Hon John
Wardle, Charles (Bexhill)


Pawsey, James
Warren, Kenneth


Peacock, Mrs Elizabeth
Watts, John


Porter, Barry (Wirral S)
Wells, Bowen


Porter, David (Waveney)
Wheeler, Sir John


Portillo, Michael
Whitney, Ray


Price, Sir David
Widdecombe, Ann


Raison, Rt Hon Sir Timothy
Wiggin, Jerry


Rathbone, Tim
Wilkinson, John


Riddick, Graham
Wilshire, David


Ridsdale, Sir Julian
Winterton, Mrs Ann


Roberts, Rt Hon Sir Wyn
Winterton, Nicholas



Roe, Mrs Marion
Wolfson, Mark


Ross, William (Londonderry E)
Wood, Timothy


Rossi, Sir Hugh
Woodcock, Dr. Mike


Rost, Peter
Yeo, Tim



Rowe, Andrew
Young, Sir George (Acton)


Rumbold, Rt Hon Mrs Angela
Younger, Rt Hon George


Ryder, Rt Hon Richard



Sayeed, Jonathan
Tellers for the Noes:


Scott, Rt Hon Nicholas
Mr. David Lightbown and


Shaw, David (Dover)
Mr. Tom Sackville.

Question accordingly negatived.

Main Question put:—

The House divided: Ayes 304, Noes 201.

Division No. 101]
[10.15 pm


AYES


Adley, Robert
Durant, Sir Anthony


Aitken, Jonathan
Dykes, Hugh


Alexander, Richard
Eggar, Tim


Alison, Rt Hon Michael
Evans, David (Welwyn Hatf'd)


Allason, Rupert
Evennett, David


Amery, Rt Hon Julian
Fallon, Michael


Amess, David
Farr, Sir John


Amos, Alan
Favell, Tony


Arbuthnot, James
Fenner, Dame Peggy


Arnold, Jacques (Gravesham)
Field, Barry (Isle of Wight)


Arnold, Sir Thomas
Finsberg, Sir Geoffrey


Aspinwall, Jack
Fishburn, John Dudley


Atkins, Robert
Fookes, Dame Janet



Atkinson, David
Forman, Nigel


Baker, Rt Hon K. (Mole Valley)
Forsyth, Michael (Stirling)


Baker, Nicholas (Dorset N)
Forsythe, Clifford (Antrim S)


Baldry, Tony
Forth, Eric


Batiste, Spencer
Fowler, Rt Hon Sir Norman


Beaumont-Dark, Anthony
Fox, Sir Marcus


Beggs, Roy
Freeman, Roger


Bellingham, Henry
French, Douglas


Bendall, Vivian
Fry, Peter


Bennett, Nicholas (Pembroke)
Gale, Roger


Benyon, W.
Gardiner, Sir George


Bevan, David Gilroy
Garel-Jones, Rt Hon Tristan


Biffen, Rt Hon John
Gill, Christopher


Blackburn, Dr John G.
Glyn, Dr Sir Alan


Blaker, Rt Hon Sir Peter
Goodlad, Rt Hon Alastair


Body, Sir Richard
Goodson-Wickes, Dr Charles


Bonsor, Sir Nicholas
Gorman, Mrs Teresa


Boscawen, Hon Robert
Gorst, John


Boswell, Tim
Grant, Sir Anthony (CambsSW)


Bottomley, Peter
Greenway, Harry (Ealing N)


Bottomley, Mrs Virginia
Greenway, John (Ryedale)


Bowden, A. (Brighton K'pto'n)
Gregory, Conal


Bowden, Gerald (Dulwich)
Griffiths, Sir Eldon (Bury St E')


Bowis, John
Griffiths, Peter (Portsmouth N)


Boyson, Rt Hon Dr Sir Rhodes
Grist, Ian


Braine, Rt Hon Sir Bernard
Ground, Patrick


Brandon-Bravo, Martin
Gummer, Rt Hon John Selwyn


Brazier, Julian
Hague, William


Bright, Graham
Hamilton, Rt Hon Archie


Brooke, Rt Hon Peter
Hamilton, Neil (Tatton)


Brown, Michael (Brigg &amp; Cl't's)
Hampson, Dr Keith


Browne, John (Winchester)
Hanley, Jeremy


Buck, Sir Antony
Hannam, Sir John



Budgen, Nicholas
Hargreaves, A. (B'ham H'll Gr')


Burns, Simon
Hargreaves, Ken (Hyndburn)


Burt, Alistair
Harris, David


Butcher, John
Haselhurst, Alan


Butterfill, John
Hawkins, Christopher


Carlisle, John, (Luton N)
Hayes, Jerry


Carlisle, Kenneth (Lincoln)
Hayhoe, Rt Hon Sir Barney


Carrington, Matthew
Hayward, Robert


Carttiss, Michael
Heathcoat-Amory, David


Cash, William
Heseltine, Rt Hon Michael


Channon, Rt Hon Paul
Hicks, Mrs Maureen (Wolv' NE)


Chapman, Sydney
Hicks, Robert (Cornwall SE)


Chope, Christopher
Higgins, Rt Hon Terence L.


Clark, Rt Hon Alan (Plymouth)
Hill, James


Clark, Dr Michael (Rochford)
Hind, Kenneth


Clark, Rt Hon Sir William
Hordern, Sir Peter


Clarke, Rt Hon K. (Rushcliffe)
Howarth, Alan (Strat'd-on-A)


Coombs, Anthony (Wyre F'rest)
Howarth, G. (Cannock &amp; B'wd)


Cope, Rt Hon Sir John
Howe, Rt Hon Sir Geoffrey


Cormack, Patrick
Howell, Rt Hon David (G'dford)


Couchman, James
Howell, Ralph (North Norfolk)


Currie, Mrs Edwina
Hughes, Robert G. (Harrow W)


Davies, Q. (Stamf'd &amp; Spald'g)
Hunt, Rt Hon David


Davis, David (Boothferry)
Hunt, Sir John (Ravensbourne)


Day, Stephen
Hunter, Andrew


Devlin, Tim
Hurd, Rt Hon Douglas


Dickens, Geoffrey
Irvine, Michael


Dicks, Terry
Jack, Michael


Dorrell, Stephen
Jackson, Robert


Dover, Den
Jessel, Toby


Dunn, Bob
Johnson Smith, Sir Geoffrey





Jones, Gwilym (Cardiff N)
Rost, Peter


Jones, Robert B (Herts W)
Rowe, Andrew


Jopling, Rt Hon Michael
Rumbold, Rt Hon Mrs Angela


Kellett-Bowman, Dame Elaine
Ryder, Rt Hon Richard


Kilfedder, James
Sayeed, Jonathan


King, Roger (B'ham N'thfield)
Scott, Rt Hon Nicholas


King, Rt Hon Tom (Bridgwater)
Shaw, David (Dover)


Knapman, Roger
Shaw, Sir Giles (Pudsey)


Knight, Greg (Derby North)
Shaw, Sir Michael (Scarb')


Knight, Dame Jill (Edgbaston)
Shelton, Sir William


Knox, David
Shephard, Mrs G. (Norfolk SW)


Lamont, Rt Hon Norman
Shepherd, Colin (Hereford)


Lang, Rt Hon Ian
Shersby, Michael



Latham, Michael
Sims, Roger


Lee, John (Pendle)
Skeet, Sir Trevor


Lennox-Boyd, Hon Mark
Smith, Sir Dudley (Warwick)


Lester, Jim (Broxtowe)
Smith, Tim (Beaconsfield)


Lightbown, David
Smyth, Rev Martin (Belfast S)


Lilley, Rt Hon Peter
Soames, Hon Nicholas


Lloyd, Sir Ian (Havant)

Speller, Tony


Lloyd, Peter (Fareham)
Spicer, Michael (S Worcs)


Lord, Michael
Squire, Robin


Luce, Rt Hon Sir Richard
Stanbrook, Ivor


MacGregor, Rt Hon John
Stanley, Rt Hon Sir John


MacKay, Andrew (E Berkshire)
Steen, Anthony


McLoughlin, Patrick
Stern, Michael


McNair-Wilson, Sir Michael
Stevens, Lewis


McNair-Wilson, Sir Patrick
Stewart, Allan (Eastwood)


Madel, David
Stewart, Andy (Sherwood)


Mans, Keith
Stewart, Rt Hon Sir Ian


Maples, John
Stokes, Sir John


Marland, Paul
Sumberg, David


Marlow, Tony
Summerson, Hugo


Marshall, John (Hendon S)
Tapsell, Sir Peter


Martin, David (Portsmouth S)
Taylor, Ian (Esher)


Maude, Hon Francis
Taylor, Sir Teddy


Mawhinney, Dr Brian
Tebbit, Rt Hon Norman


Mayhew, Rt Hon Sir Patrick
Temple-Morris, Peter


Mellor, Rt Hon David
Thompson, Sir D. (Calder Vly)


Meyer, Sir Anthony
Thompson, Patrick (Norwich N)


Mitchell, Andrew (Gedling)
Thornton, Malcolm


Mitchell, Sir David
Thurnham, Peter


Morris, M (N'hampton S)
Townend, John (Bridlington)


Morrison, Sir Charles
Tracey, Richard


Moss, Malcolm
Tredinnick, David


Neale, Sir Gerrard
Trippier, David


Needham, Richard
Twinn, Dr Ian


Nelson, Anthony
Vaughan, Sir Gerard


Neubert, Sir Michael
Wakeham, Rt Hon John


Newton, Rt Hon Tony
Waldegrave, Rt Hon William


Nicholls, Patrick
Walden, George


Nicholson, David (Taunton)
Walker, Bill (T'side North)


Nicholson, Emma (Devon West)
Walker, Rt Hon P. (W'cester)


Norris, Steve
Waller, Gary


Onslow, Rt Hon Cranley
Walters, Sir Dennis


Oppenheim, Phillip
Wardle, Charles (Bexhill)


Page, Richard
Warren, Kenneth


Paice, James
Watts, John


Parkinson, Rt Hon Cecil
Wells, Bowen


Patnick, Irvine
Wheeler, Sir John


Patten, Rt Hon Chris (Bath)
Whitney, Ray


Patten, Rt Hon John
Widdecombe, Ann


Pattie, Rt Hon Sir Geoffrey
Wiggin, Jerry


Pawsey, James
Wilkinson, John


Peacock, Mrs Elizabeth
Wilshire, David


Porter, Barry (Wirral S)
Winterton, Mrs Ann


Porter, David (Waveney)
Winterton, Nicholas


Portillo, Michael
Wolfson, Mark


Price, Sir David
Wood, Timothy


Raison, Rt Hon Sir Timothy
Woodcock, Dr. Mike


Rathbone, Tim
Yeo, Tim


Riddick, Graham
Young, Sir George (Acton)


Ridsdale, Sir Julian
Younger, Rt Hon George


Roberts, Rt Hon Sir Wyn



Roe, Mrs Marion
Tellers for the Ayes:


Ross, William (Londonderry E)
Mr. John M. Taylor and


Rossi, Sir Hugh
Mr. Tom Sackville.






NOES


Allen, Graham
Dunwoody, Hon Mrs Gwyneth


Alton, David
Eadie, Alexander


Anderson, Donald
Edwards, Huw


Archer, Rt Hon Peter
Enright, Derek


Armstrong, Hilary
Evans, John (St Helens N)


Ashdown, Rt Hon Paddy
Ewing, Harry (Falkirk E)


Ashley, Rt Hon Jack
Fatchett, Derek


Ashton, Joe
Faulds, Andrew


Banks, Tony (Newham NW)
Field, Frank (Birkenhead)


Barnes, Harry (Derbyshire NE)
Fisher, Mark


Barron, Kevin
Flannery, Martin


Battle, John
Flynn, Paul


Beckett, Margaret
Foot, Rt Hon Michael


Beith, A. J.
Foster, Derek


Bell, Stuart
Foulkes, George


Bellotti, David
Fraser, John


Benn, Rt Hon Tony
Fyfe, Maria


Bennett, A. F. (D'nt'n &amp; R'dish)
Galloway, George


Benton, Joseph
Garrett, John (Norwich South)


Bidwell, Sydney
Garrett, Ted (Wallsend)


Blair, Tony
Gilbert, Rt Hon Dr John


Boateng, Paul
Godman, Dr Norman A.


Boyes, Roland
Golding, Mrs Llin


Bradley, Keith
Graham, Thomas


Bray, Dr Jeremy
Griffiths, Nigel (Edinburgh S)


Brown, Gordon (D'mline E)
Griffiths, Win (Bridgend)


Brown, Nicholas (Newcastle E)
Grocott, Bruce


Brown, Ron (Edinburgh Leith)
Hain, Peter


Bruce, Malcolm (Gordon)
Hardy, Peter


Callaghan, Jim
Harman, Ms Harriet


Campbell, Menzies (Fife NE)
Haynes, Frank


Campbell, Ron (Blyth Valley)
Heal, Mrs Sylvia


Campbell-Savours, D. N.
Healey, Rt Hon Denis


Canavan, Dennis
Henderson, Doug


Carlile, Alex (Mont'g)
Hinchliffe, David


Carr, Michael
Hoey, Kate (Vauxhall)


Clark, Dr David (S Shields)
Hogg, N. (C'nauld &amp; Kilsyth)


Clarke, Tom (Monklands W)
Hood, Jimmy


Clelland, David
Howarth, George (Knowsley N)


Clwyd, Mrs Ann
Howell, Rt Hon D. (S'heath)


Cohen, Harry
Howells, Geraint


Cook, Frank (Stockton N)
Howells, Dr. Kim (Pontypridd)


Cook, Robin (Livingston)
Hoyle, Doug


Corbett, Robin
Hughes, John (Coventry NE)


Corbyn, Jeremy
Hughes, Robert (Aberdeen N)


Cousins, Jim
Hughes, Roy (Newport E)


Crowther, Stan
Ingram, Adam


Cryer, Bob
Janner, Greville


Cunliffe, Lawrence
Jones, Barry (Alyn &amp; Deeside)


Cunningham, Dr John
Jones, Martyn (Clwyd S W)


Davies, Rt Hon Denzil (Llanelli)
Kennedy, Charles


Davies, Ron (Caerphilly)
Kilfoyle, Peter


Davis, Terry (B'ham Hodge H'l)
Kinnock, Rt Hon Neil


Dewar, Donald
Kirkwood, Archy


Dixon, Don
Kumar, Dr. Ashok



Dobson, Frank
Lambie, David


Duffy, Sir A. E. P.
Lamond, James


Dunnachie, Jimmy
Leadbitter, Ted





Lewis, Terry
Quin, Ms Joyce


Litherland, Robert
Radice, Giles


Livsey, Richard
Randall, Stuart


Lloyd, Tony (Stretford)
Redmond, Martin


Lofthouse, Geoffrey
Rees, Rt Hon Merlyn


Loyden, Eddie
Robertson, George


McAllion, John
Rogers, Allan


McAvoy, Thomas
Rooney, Terence



McCartney, Ian
Rowlands, Ted


McCrea, Rev William
Ruddock, Joan


Macdonald, Calum A.
Sheerman, Barry


McKay, Allen (Barnsley West)
Sheldon, Rt Hon Robert


McLeish, Henry
Shore, Rt Hon Peter


Maclennan, Robert
Short, Clare


McMaster, Gordon
Skinner, Dennis


McNamara, Kevin
Smith, Andrew (Oxford E)


Madden, Max
Smith, C. (Isl'ton &amp; F'bury)


Mahon, Mrs Alice
Smith, Rt Hon J. (Monk'ds E)


Marek, Dr John
Smith, J. P. (Vale of Glam)


Marshall, David (Shettleston)
Soley, Clive


Marshall, Jim (Leicester S)
Spearing, Nigel


Martin, Michael J. (Springburn)
Steel, Rt Hon Sir David


Maxton, John
Steinberg, Gerry


Meacher, Michael
Stephen, Nicol


Meale, Alan
Stott, Roger


Michael, Alun
Taylor, Mrs Ann (Dewsbury)


Michie, Bill (Sheffield Heeley)
Taylor, Matthew (Truro)


Michie, Mrs Ray (Arg'l &amp; Bute)
Turner, Dennis


Morgan, Rhodri
Vaz, Keith


Morley, Elliot
Wallace, James


Morris, Rt Hon A. (W'shawe)
Walley, Joan


Morris, Rt Hon J. (Aberavon)
Wardell, Gareth (Gower)


Mowlam, Marjorie
Watson, Mike (Glasgow, C)


Mullin, Chris
Welsh, Michael (Doncaster N)


Murphy, Paul
Williams, Rt Hon Alan


Oakes, Rt Hon Gordon
Williams, Alan W. (Carm'then)


O'Brien, William
Wilson, Brian


O'Hara, Edward
Winnick, David


O'Neill, Martin
Wise, Mrs Audrey


Parry, Robert
Worthington, Tony


Pendry, Tom
Wray, Jimmy


Powell, Ray (Ogmore)



Prescott, John
Tellers for the Noes:


Primarolo, Dawn



Mr. Jack Thompson and



Mr. Eric Illsley.

Question accordingly agreed to.

Resolved,
That this House congratulates the Government on its prudent economic policies, which have led to a substantial reduction in inflation; notes that the level of inflation in the United Kingdom has been half that under the previous Government, is now below the average for the European Community and close to the level in Germany; notes further that low inflation is essential to a sustained recovery in output and employment; and draws attention to the policies of Her Majesty's Opposition, which would inevitably lead to higher inflation, higher interest rates and higher unemployment.

Fire Service College

The Minister of State, Home Office (Mr. John Patten): I beg to move,
That the draft Fire Service College Trading Fund Order 1992, which was laid before this House on 11th February, be approved.
The Fire Service college is the central training institution of the British fire service. It is time that it moved on and became a trading fund.
A little history first. The college is a Home Office establishment and, for many years, was mainly financed from the Home Office vote with all fire brigades' staff training being provided free of charge. Two years ago, an agreement was reached with the local authority associations whereby the cost of meeting that training would be met by charges levied by the college with the additional burden on fire authorities being funded through the revenue support grant—initially by top-slicing. The college is scheduled to become an executive agency under the Government's "next steps" programme on 1 April 1992 and full direct charging will be introduced on that date. Thereafter, the college's expenditure will be fully financed by receipts from its customers. If the House approves the order, the college will be the first "next steps" agency to operate as a trading fund from the outset.

Mr. John Greenway: Can my right hon. Friend confirm that, when he talks about trading receipts, he has it in mind that the Fire Service college will be able to attract custom from the private sector? Big industrial plants, for example, would then be able to have their fire services trained by the Fire Service college. There is an important point for the North Yorkshire fire service and for many others. Would that reduce the charge for our local authority fire services?

Mr. Patten: I agree with my hon. Friend. If the trading fund is set up, the charges levied on the private sector would be such that the charges levied at present on fire authorities will be reduced. The public sector will benefit substantially from the net effects of the order.

Mr. Allen McKay: If the private sector has its fire officers trained at Moreton-in-Marsh, given that the college is at full capacity now, the training of fire service officers will have to be curtailed to make room for private services.

Mr. Patten: There is no possibility of that. I envisage that about three quarters of the work of the trading fund "next steps" agency, if the House should approve it, will be involved in training local authorities. Some local authorities are already telling us that they intend to make other training arrangements with new freedoms.
The earlier financial arrangements meant that the college had, in effect, a monopoly in the supply of fire officer training. The introduction of direct charges means that brigades are free to look to any training provider. Although direct competition in the range of courses is limited by the high cost of providing a fully equipped fireground—the college's fireground is, in the proper sense of the word, unique—the college certainly faces competition in future for part of its curriculum. Perhaps I may give a few examples.
The Civil Aviation Authority training school at Teesside, the offshore fire training centre at Montrose, and the Petroleum Training Federation already have particular niches in certain bits of the market. Many college courses are classroom-based. They do not make use of the panoply of firegrounds facilities and they may be capable of being provided by other training institutes. I also understand on advice that some fire authorities which maintain facilities for technical and recruit training are considering whether it would be more cost-effective to expand their own facilities rather than send their people to Moreton-inMarsh. That is a perfectly proper thing for a fire authority to choose to do.

Mr. William O'Brien: Could not it be said that the existing college has the facilities of all fire services throughout the country because they sent their officers there to be trained? Do we take it from what the hon. Member for Ryedale (Mr. Greenway) said that we are witnessing the privatisation of the training of officers and, therefore, the first step to the privatisation of the fire services? That would leave many communities vulnerable because of the Government's cuts in local government services. Is this not the first step to privatisation?

Mr. Patten: The hon. Member for Normanton (Mr. O'Brien) raised two separate points about vulnerability. Under the charge of my right hon. Friend the Secretary of State for the Home Department, the fire services inspectorate ensures that a proper level of fire cover is maintained in all parts of the kingdom. On the hon. Gentleman's first point, we are not seeing the first steps to privatisation. Hon. Members know what the Government are like—we do not mess about; if we thought that it was right to privatise, we would privatise straight away.
At the moment, the move to a trading fund and a "next steps" agency status will enable enormous benefits in fire service training. In particular, 450 commercial companies wish to pay the full cost—a substantial sum indeed—for student weeks of fire training, which means that the sums charged to fire authorities will be substantially reduced. That is a bargain to the public sector. By the time I have explained that matter, I should be very surprised if any hon. Members would think of voting against this important order.
The order is fully consistent with the principles underlying the White Paper "Competing for Quality". The college always has provided and intends to continue to provide a highly professional training service, and I pay tribute to those in the fire service training college for what they do. The college is first-rate and it has a worldwide reputation. The establishment of a trading fund will provide the college with greater financial flexibilities, in particular enabling it to react much more quickly to changing demand from those who want to use its services.
I now refer to the order itself. Articles 1 and 2 state that the college will become a trading fund on 1 April, to coincide with the start of the financial year. The college, as I am sure that the House knows, is established under section 23 of the Fire Services Act 1947, under which the Secretary of State may establish and maintain a central training institution for providing courses of instruction in matters relating to fire services. We propose that all the operations of the college should be financed through the trading fund.

Mr. Paul Flynn: Does the Minister accept that this will be about the 58th "next steps" agency? Will it be any more accountable directly to Members of Parliament than any of the other 57? Questions tabled about agencies never see the light of day in Hansard or any other publication that is readily available to Members. Will the Minister guarantee that, when Members table questions, ministerial responsibility will be accepted for the college and that answers to those questions will appear in Hansard?

Mr. Patten: Day-to-day responsibility for the agency, as for other agencies, will reside in the chief executive designate, who will deal with normal operational matters. Broader policy matters are, of course, for my right hon. Friend the Home Secretary and Lord Ferrers, who has ministerial responsibility for the matter.
Article 3 provides that any loans issued to the trading fund will be made from the Home Office vote, while article 4(1) and the schedule establish the assets and liabilities which will be appropriated to the trading fund on 1 April.
Article 4(2) provides the percentage of the net assets appropriated to the fund to be financed by public dividend capital. As the House knows, that is the public sector equivalent of share capital in a company or an equity stake in a business.
Article 5 provides that the maximum amount of loan which may be issued to the fund shall be set at £15 million. That relates to new loans that may be needed after 1 April 1992. That is set at such a level as to ensure that in a period of about four years the House will have an opportunity to debate whether the loan needs to be examined and increased. That means that the House will be able to debate the future of the college as a trading fund. Perhaps at that stage privatisation issues may emerge.
I should also tell the House about the pricing policy that the college proposes to adopt. For some years the college has provided training, albeit on a small scale, for private sector companies such as those in the chemicals and petroleum industries, to which my hon. Friend the Member for Ryedale (Mr. Greenway) referred. The college has been established and maintained for many years by public funds. It has a large staff of professional firefighters of great expertise seconded from brigades. Therefore, it is right and proper that the charges made to the private sector should take account of that public investment. Course fees for that sector will be set above full cost. In other words, the private sector will be charged more than the full cost per student week at a level which the market will bear.
Conversely, the college will aim in its strategy to charge the statutory fire authorities prices which are substantially below full cost. Thus the fire authorities will benefit, as my hon. Friend the Member for Ryedale highlighted, from the new arrangements. Those fees will be below full cost but income from other customers will allow the college to meet its overall financial objectives. That is a very good deal for the public sector.

Mr. Peter Hardy: The Minister says that there will be a substantial take-up of places by the private sector. One can imagine that in the first years that take-up will be substantial. But if it is not maintained at a substantial level and there is a fall-off—for example, if recessionary conditions continue and the private sector is unable to take up those places—under the Minister's

arrangements the fire authorities would inevitably find themselves having to pay a great deal more than the sums that he has in mind.

Mr. Patten: I do not believe that that would be so. The hon. Gentleman will be aware of the trading difficulties that face several companies in the private sector which need to train firefighters at this time. If at this point in the economic cycle we have 450 outstanding applications, I doubt that in two or three years there will be sufficient capacity. The hon. Gentleman's worry might well be in the other direction.
By next year the private sector may well be charged —these are not exact figures—about £1,100 a week for the average course whereas the public sector would be charged about £600 a week. That is a substantial difference and a bargain for the public sector. That is why we have introduced the order.

Mr. Ian McCartney: Will the Minister give way?

Mr. Patten: Of course. I am glad to see a Member from Lancashire rising, to join the Yorkshire Members.

Mr. McCartney: Can the Minister tell that I come from Lancashire by my accent?

Mr. Patten: I shall make no racist remarks.

Mr. McCartney: He should not make any sizeist ones either.
The Minister is trying to paint a rosy picture of a bargain for local authorities. Is it not the truth that the £595 per week student course—if that is the exact figure is an increase from £219 per week on the previous year? For my local authority that means an immediate increase of £330,000, none of which has been taken into account in terms of next year's standard spending assessment. That is a huge hike in costs for local authority fire services.

Mr. Patten: That is why there is a 16 per cent. increase in provision for fire authorities in the current year and why next year there will be a further 8·4 per cent. increase in provision—representing a substantial increase above inflation—and increases in pay for firefighters. As I am sure the House knows, although training is important, the amount of money devoted to it by fire authorities is a small part of their overall budget.

Mr. Flynn: Will the hon. Gentleman give way?

Mr. Patten: I should not mind making a spot of progress but I shall give way because the hon. Gentleman has a nice smile.

Mr. Flynn: I am sure that the increases that the Minister mentioned are genuine, but will he look at a recent parliamentary answer which established that one of the unexpected effects of recession is a great increase in fires, especially those started by owners who are about to go into receivership, and who have set fire to their factories?

Mr. Patten: The reports are partly speculative. We will have to study a run of figures for several years to find out if what has happened in the past year or 18 months represents the trend to which the hon. Gentleman refers.
Perhaps I could return to my speech. Subject to the draft order being approved, the Treasury proposes to lay a minute before the House setting out the financial objective for the college—which my right hon. Friend the


Home Secretary has set—which will be to make an average real rate of return in the next three years of not less than 6·5 per cent. on capital employed, on the basis of reasonable prospects for the future. The college certainly forecasts that it will be able to achieve that.
In response to earlier concerns about provision of training for the public sector, let me say that about 80 per cent. of the 1992–93 target figure for United Kingdom fire service student weeks has already been confirmed. That means that bookings by the majority of fire authorities have been accepted and are already in place. That represents an investment by authorities of about £9 million, ranging from smaller authorities spending perhaps £60,000 on training to the larger authorities spending about £300,000 per year. There is also great interest from the commercial and international sectors by reason of the college's exceptional facilities. It is late at night, but it is worthwhile recording the facilities at Moreton-in-Marsh. There is a full-scale replica shopping mall, industrial buildings, a chemical plant, a stretch of motorway, and aircraft, ship and railway complexes, providing for realistic hot fire training in the wide range of environments which firefighters may sometimes encounter. That is why 450 companies are queuing up to join in the training there, to spend money and to reduce the burden on the chargepayer and the taxpayer.
Before laying the draft order, we placed in the Libraries of both Houses, in accordance with sections 1 and 6 of the Government Trading Funds Act 1973, a report on the consultations conducted about trading fund status for the fire service college. As the report shows, no concerns about trading fund status were expressed to us by any person. At present the staff of the fire authorities account for about 90 per cent. of college places. Although the level of courses that that figure implies is set to rise, we expect the proportion of courses dedicated to fire brigade staff to remain substantial. Government support to the college will continue at its present high level, as it will to the United Kingdom fire service.
The fire service college has done a good job to date. Its capacity to do so in the future will be enhanced should this order be approved tonight. The flexibility that trading fund status will give is important. It is a classic example of obtaining better value for money for the taxpayer and for the community charge payer. A vote against the order is a vote in favour of charging our fire authorities higher prices for training, thereby costing the chargepayer and the taxpayer more. I commend the order to the House.

Mr. Barry Sheerman: The way in which the Minister ran through his speech without any real feeling for the difficulties faced by the fire services was quite breathtaking. Anyone who speaks to senior fire service officers and men and women in the service at all levels and in all parts of the country will find that the service is heading for disarray and disorder. The story is everywhere the same, and the order is at the heart of the concern. Lack of morale, uncertainty, bitterness and fear for the future all centre on the order.

Mr. Deputy Speaker (Mr. Harold Walker): Order. This is not the occasion for a general debate on fire services. It is a narrow debate on the funding of the college.

Mr. Sheerman: I know that it is a narrow debate, and the whole of my speech will focus on that.
The Minister was complacent about the background to the order and, as a brief preface to my speech, I must make known the genuine concern in the fire service and the fact that the order is at the centre of that concern. The proposed status of the service is at the heart of the problems it faces.

Mr. O'Brien: One of our worries about the privatisation of the training college is that it will cost fire authorities more. That will lead to a reduction in the number of personnel or in equipment, thus reducing fire cover for many communities. Morale in the service is reducing, because people know that the order will reduce the services and resources of fire authorities. That has an impact on the morale of men in the force.

Mr. Sheerman: My hon. Friend the Member for Normanton (Mr. O'Brien) puts his finger on the precise problem. What happens to the college and to the nature of training will affect the service that can be provided by fire authorities, which to date have provided a service that is second to none.
The order increases the problems faced by the fire service in maintaining the security of people all over Britain. We have evidence of the concern of specific authorities not far from your constituency, Mr. Deputy Speaker, and that concern focuses on the training college.
The Opposition oppose the order, and we are not alone in opposing the move to agency status. Whatever the Minister says, we know that the Fire Brigades Union, the Association of Metropolitan Authorities and the National Association of Fire Officers are opposed to the move, and the Association of County Councils disagree with the decision on agency status. The Institution of Professionals, Managers and Specialists is worried about the order. All those organisations fear that agency status and direct charging for courses will lead to a reduction in the training that fire authorities can afford. That will mean a reduction in the high standards of firefighting that Britain enjoys, and we shall face the risk that the college will not be financially viable.
The Minister, as ever, painted a rosy picture of a move to agency status followed in three years by privatisation. He was quite candid about that. Many fire authorities are already under considerable financial pressure because of inadequate standard spending assessments. For example, SSAs take no account of non-fire emergency rescue services. That relates to people locked in or out of premises or trapped in lifts. Those of us who have a motorway through our constituency know about the enormous—[Interruption.] With typical arrogance, the Minister turns up his nose and screws up his eyes as if he does not want to hear the truth. The truth about the order is that all the services are under threat. The Minister said that a stretch of motorway has been built at the college. One of the training courses in the college is for the non-fire emergency. Those emergencies account for 77 per cent. of the growth in the calls on the fire service.
The growth in fire emergencies is about 7 per cent. per annum; for non-fire emergencies, the growth is 77 per cent. The SSA takes no account of those emergencies. That is what lies behind the whole problem with the college. It provides the training to get people out of wrecked cars and the worst sort of situations, as well as the more familiar


incidents of people locked in premises, flooded premises and cats up trees. Those services represent 39·4 per cent. of emergency services provided, for example, by the London fire brigade. It represents a 71 per cent. increase since 1985–86.
In addition, the SSAs make insufficient allowance for the cost of fire service pensions. I will not go into that tonight, Mr. Deputy Speaker, as I would be out of order, but it must be said that those pensions have to be paid for out of revenue. It is a rapidly rising cost as a proportion of revenue budgets.
The order, which provides for direct funding of the college, puts even greater pressure on budgets. Indeed, this financial year, two major fire authorities were unable to send anyone to the college. What sort of country do we live in when two major fire authorities can no longer send their officers to the premier training centre in the country'? That is a severe condemnation—

Mr. John Patten: As a matter of fact, the college has undertaken, and will continue to undertake, to meet all training demands made by local authority fire brigades before accepting applications from the commercial sector.

Mr. Sheerman: That does not solve the problem if a fire authority cannot afford to send the officers.
Her Majesty's inspector of fire services expressed his concern about brigades being unable to send officers to train on those excellent courses. Perhaps the Minister will intervene yet again to say why the inspector is concerned. If the Government, the Home Secretary and his team are not concerned, why is the inspector concerned that the ability to send men and women on those courses will be lost?
The problem from this April onwards will be far more dire. Instead of phasing in direct charging over three years, the Government have rushed into full direct charging and have abolished top slicing. That means that, this April, fire authorities will have to pay the full cost of training their fire fighters at the college. Many authorities simply do not have the money to pay for the training that they need. It is nothing short of a scandal. Our authorities are having to make choices between cuts in training and cuts in other budget areas.
It is not often that I pray in aid Buckinghamshire, but I understand that that authority is proposing to close four retained fire stations—not because they are unnecessary, not because they do not provide good cover for some of the surburban areas that are becoming increasingly a problem to service in prompt time, but because the authority can save £90,000 and so pay for its staff to go to the college. Perhaps the Minister will deal with that point about Buckinghamshire.

Mr. John Patten: Does that have anything to do with the order?

Mr. Sheerman: It has everything to do with it. The Minister does not need your protection, Mr. Deputy Speaker. During his 20-minute speech, he mentioned privatisation, the kitchen sink, his pet dog, the smiles on the faces of my hon. Friends, and everything else—but he was not called to order. Now the right hon. Gentleman seeks the protection of the Chair, as he usually does, because he is frightened of a good debate.
Only the day before yesterday, the Minister fled from a television studio, frightened to enter into debate with

Opposition Members because his boss, the Home Secretary, had sent out an edict saying that Government Ministers must not appear with shadow Ministers.

Mr. Deputy Speaker: Order. Let us return to the debate on the order.

Mr. Sheerman: The Minister fled from the television studios. I want to debate this order on television, before a wider audience—but the right hon. Gentleman has been forbidden to appear because he will get a drubbing, as he gets a drubbing over law and order and everything else. The Minister is frightened to go into a television studio with me—terrified.

Mr. Deputy Speaker: Order. Let us return to the order, please.

Mr. Sheerman: In a democracy, we should be able to debate such matters with Ministers on television, without them running away.
My own county is spending £250,000 on training, although it estimates the cost of its training needs at £500,000, and has been advised by the college that it should spend £750,000. Councillor Laurence Conlan, chairman of West Yorkshire fire authority, is extremely concerned that it cannot meet the desired training standards. Is it not a condemnation of the order that the chairman of a leading fire authority such as West Yorkshire is deeply concerned that neither he nor the authority are fulfilling their obligations because of the effects of the Home Office decision on fire service training? The consequences of implementing the order will be even more dire.
The detrimental effect of the move to training fund status can be judged by a written answer that I recently received from the Minister. I asked:
how many student places have been confirmed for (a) local authority financed brigades and (b) industrial and overseas courses at the fire service college for the year beginning April 1992".
Perhaps the right hon. Gentleman is not interested in my question or the answer that he gave. Because they are not mentioned in his brief, he will not intervene. Instead, another little piece of paper will come from the Box. The Minister replied:
Three thousand, three hundred and forty-eight places covering 13,019 student weeks have so far been confirmed for local authority fire brigades for the year from 1 April 1992. One hundred and sixty-nine places covering 263 student weeks have been confirmed for the industrial and overseas sectors"—[Official Report, 11 February 1992; Vol. 203, c. 439.]
On that basis, it is highly unlikely that the college will reach its income targets and be at all viable in its first year as a training fund. That serious situation was totally covered up and disguised by the Minister's remarks this evening. My remarks are based on the right hon. Gentleman's written answer, which was presumably prepared by civil servants and is correct. The Minister knows that there is a severe problem in funding the college on the basis that he introduced tonight.
The IPMS estimates that the total income from courses so far booked will be £7·969 million, but it is estimated that the college needs an income of £ 17·4 million. There may be some late bookings, but it is unlikely that the number of student weeks needed on which the college is operating this year will be achieved. This year, 19,000 to 20,000 student weeks are booked.
The college hoped to make more money by offering courses overseas and for other non-fire work, but they have not materialised in sufficient numbers. In any event, if the college looks overseas and to industrial needs, it will gradually move away from its key role as a provider of national fire service training.
There are additional problems in this brave new world of privatisation, which puts the market before public safety. Some authorities are telling their firefighters that, if they move to a different authority within three years of attending a training course, they will have to pay back the cost of their training. Can you imagine, Mr. Deputy Speaker, what the order will do to the mobility of trained personnel? What if teachers, or members of any other profession, had to repay the costs of their training before they could move? This is a recipe for disaster—for the decimation of a public service.
It is absurd. A well-trained fire officer is what we have always considered him to be: a national asset, wherever he —or she—is stationed. The move to trading fund status is short-sighted. As usual with the Government, it displays more concern for the ideology of political dogma than for the safety of the public.[Interruption.] It is about time the hon. Member for Dorset, North (Mr. Baker) read a few books. I can tell him that, in a few weeks, he will have a damn sight more time to do so. He will have many quiet hours on the Opposition Back Benches in which to read them—piles of them. We shall send a few books to educate him, although it is probably too late. We might even send him to the fire service college for training, if he could obtain the entrance qualifications.
As I was saying, the move to trading fund status is short-sighted, and displays more concern for political dogma than for the safety of our public. That is typical of what Opposition Members have come to expect from the Government. The fire service college has always been seen as a national asset. What is wrong with one of the best fire colleges in the world providing training for overseas forces? Indeed, why should it not offer the same service to the private sector? We do not disagree with that. What we oppose is the proposal to destroy its very base—to move it into the private sector, and endanger its future and its ability to remain as a centre.
This centre has offered high-quality training to our fire brigades. Now all that is to be jeopardised in pursuit of a

market approach that will leave some brigades with inadequately trained staff, and may force the college to close. We are making a fuss about the order because this is a question of public safety. It is a question of whether the country can provide a proper response to the numerous fires that still occur, and—tragically—kill people, usually in the residential sector. The service to residential areas needs constantly to be improved; it does not need to be watered down. We have to get machines, men and women to those fires to save young lives every year, to try to lower the number of desperate casualties. The order will undermine the ability of our public service to do that.

Sir John Wheeler: The hon. Gentleman is suggesting to the public that, as a result of the order, the 54 fire brigades in England and Wales will not provide the same standard of service. Are not those brigades inspected by Her Majesty's chief inspector of fire services to ensure that their very high standards are maintained? There is no question of any diminution in standards of fire cover or excellence.

Mr. Sheerman: I am sorry that especially the Chairman of the Select Committee on Home Affairs has got it wrong. If he did his homework and a little more reading of Her Majesty's inspectors' reports instead of getting the Clerks to read them, he would find that time and time again they have expressed their concern about declining standards in individual forces throughout the country. They have expressed concern about the enormous backlog in the checking of safety standards in, for example, health premises.

Sir John Wheeler: Will the hon. Gentleman give way?

Mr. Sheerman: No. Time is short and a number of my hon. Friends want to speak in this important debate. Yet again, the hon. Gentleman shows his ignorance of these matters.
We believe that public safety should be the paramount consideration. This is an ill-considered move by the Government. Its implementation is being botched. We intend to reverse it as soon as we form the Government in a few weeks' time. After the election, we shall restore the college to its former position as a national asset. We shall provide all fire brigades with the training they need to keep the public safe and secure. That we pledge, and we shall do it in a few short weeks.

Mr. John Greenway: I do not intend to detain the House for long, having largely covered the point that I wanted to make when my right hon. Friend the Minister of State kindly allowed me to intervene during his speech. However, having listened to what the hon. Member for Huddersfield (Mr. Sheerman) had to say about fire service standards, I hope that you will find that a few comments by me are in order, Mr. Deputy Speaker, so that I may refute some of his allegations.
I am glad that my hon. Friend the Member for Westminster, North (Sir J. Wheeler) is here. We discussed this matter privately in the Select Committee on Home Affairs when considering what issues the Committee ought to investigate. I am sure that my hon. Friend will agree that it is regrettable that during the lifetime of this Parliament we have not had the opportunity thoroughly to investigate the fire service. We did the next best thing. We invited Her Majesty's chief inspector of fire services, Sir Reginald Doyle, to come before the Committee and give evidence.
The hon. Member for Huddersfield has just made two allegations. First, he said that the chief inspector of fire services was unhappy about the standard of the service. On 27 November the chief inspector told the Committee that there had been 31 applications to the Home Secretary to reduce brigade establishments because review of the fire cover, based on the 1985 fire cover standards, had proved that there was substantial over-provision. That is precisely what happened in north Yorkshire and in my own constituency.
If the hon. Gentleman reads the Select Committee's report he will find that I raised the matter with Her Majesty's chief inspector and that what was considered to be over-provision in terms of Home Office standards of cover was not regarded as over-provision by the general public. Therefore, the expected reduction in cover in north Yorkshire was postponed, although I am pleased to be able to tell my right hon. Friend that we have gone ahead with the improvements that were also recommended. The whole process has led to a strengthening, not to a reduction, of the fire cover in north Yorkshire.
The hon. Gentleman also made a specific allegation about inspections for the purpose of granting fire certificates.

Mr. Deputy Speaker: Order. This is a long way from the order which is before the House. I can understand the hon. Gentleman's position. It is one thing for an hon. Member, by way of illustration, to quote a remark, and quite another for another hon. Member to seek to expand that into a general debate about matters other than those before the House.

Mr. Greenway: I did say, Mr. Deputy Speaker, with the permission of yourself and of the House.
The number of outstanding inspections has reduced over the past year from 3,041 to 1,823. The blame for the number still outstanding rests squarely on the inability to recruit inspectors in the London area. That is a problem across the whole public sector in London.
I do not believe that what the House is being asked to approve is unique. I was not a Member in 1968—I had not left school much before then—but if I remember correctly, in 1968 the right hon. Member for Chesterfield (Mr.

Benn), when Postmaster-General, made the Post Office into a trading fund. So we are not being asked to consider a new proposal.
I am a great enthusiast of the "next steps" agency programme. The Select Committee on Home Affairs considered the forensic science service, the passport office and the immigration service and "next steps" agency status was very attractive.[Interruption.] It is all very well Opposition Members barracking, but from my discussions with some Opposition Members who are not in their places tonight but who came to the House in 1987, as I did, I think that they are beginning to see some of the benefits of "next steps" agencies. In the unlikely event of the Labour party forming the next Government, I suspect that the recent programme of "next steps" agencies would be continued.
Three matters are crucial to the consideration of the order. The first is whether, by this process, there will be any reduction in the training of fire service personnel employed by the public sector. My right hon. Friend gave an assurance about that, but I ask him to go further. When he replies, will he give the House an assurance that if there is evidence of difficulty he will not hesitate to come back to the House, or consider the matter with the chief fire inspector, who did not raise it with us—

Mr. John Patten: I am happy to give that assurance to my hon. Friend now. I have already said that in three or four years it will be necessary to consider the loan provisions. That will provide an opportunity for a proper debate in the House again about the future. If at that stage right hon. and hon. Gentlemen want to raise issues concerned with adequacy or inadequacy, privatisation or state ownership, they can be considered then.

Mr. Greenway: I am grateful to my right hon. Friend. I do not think that the House could have expected any more categorical assurance than that.
Accountability was also raised by the hon. Member for Huddersfield. That is precisely the role of Her Majesty's chief inspector. When Sir Reginald Doyle appeared before the Select Committee in December I think that all members of the Committee, from both sides of the House, were greatly reassured by the way in which he gave his evidence and the way in which he has carried out his task. I do not think that the House needs constantly to ask questions about matters which are already the subject of close scrutiny by a chief inspector, whether in the fire service or in the police service. Hon. Members have been making a meal of that point.
The trading fund will receive money from both the public and private sectors. The public sector is getting something of a bargain from this arrangement. Because of the high level of expertise involved in the training of fire personnel, I can understand why industries, particularly those involved in industrial processes where there is a risk of fire, want to have their personnel properly trained at the establishment at Moreton-in-Marsh. My right hon. Friend the Minister suggested that 450 commercial companies are queuing up to take advantage of the facility and to pay over the odds. Perhaps my right hon. Friend can confirm that that provides an opportunity for expansion of the fire training college, not a contraction, which is what the hon. Member for Huddersfield seemed to suggest. As I have said, the public sector is being charged below full cost and that will be a bargain for the state purse.
As a Yorkshire man, I can understand why other hon. Members representing the West Yorkshire service are concerned about funding problems that may arise in the immediate future because of other factors such as standing spending assessments. We saw difficulties last year with the West Yorkshire constabulary. I know that my right hon. Friend the Home Secretary considered that and a number of us made representations about it. As my hon. Friend the Member for Westminster, North said, there is a question of priorities.
We are dealing with a principle that can provide for the better training of fire personnel in both public and private sectors. Those personnel will be trained at a reasonable cost to the state purse and there will be an expansion of training. The House is being asked to approve a medium to long-term opportunity. Although there may be some genuine difficulties that my right hon. Friend the Minister and my noble Friend Lord Ferrers in another place may wish to address, the principle of what we are being asked to approve is compelling.

Mr. Geoffrey Lofthouse: I shall be brief as other hon. Members wish to contribute. I accept your advice, Mr. Deputy Speaker, about the order being narrow, and I shall attempt to abide by your wishes. I am sure that you will appreciate that an order such as this affects the budgets of local fire authorities.
My fire authority in West Yorkshire will be in some difficulty as a result of the order. We are all aware that, before 1991, attendance was free. The only costs falling to the fire authorities were travel, out-of-pocket expenses and temporary promotion to cover for the absence of staff involved. The charge for attendance in 1991–92 was £219 per student week, representing about one third of the full cost. The charge for West Yorkshire in 1992–93, assuming normal usage, would be £595 per student week. The only way to gain a reduction would be for West Yorkshire to commit itself over a three-year period and to take up many more course weeks than it needs.
The number of student weeks required for 1992–93, given no budgetary restrictions, is 840, at an approximate cost of £500,000. Due to budget constraints, West Yorkshire can afford only 378 weeks, at a total cost of £225,000. If those figures are correct, West Yorkshire will lack 422 weeks training. Some serious cuts have been made to enable the authority to provide that insufficient training. On 21 February, the council agreed to cut £833,000 from next year's firefighting budget to escape poll tax capping. More than £54 million is needed to enable the service to stand still in 1992–93, but the Government have limited spending to £52·1 million.
The county fire authority will use £1·3 million from balances to offset the shortfall but will still be forced to make cuts totalling £833,000. Savings of £533,000 will be made by a further 12-month freeze on recruitment and of £280,000 by reducing attendances at the national fire service college. The West Yorkshire force has vacancies for 133 firefighters, and because of the budgets proposed for 1992–93, they will increase by a further 90.
As the Minister will be aware, the Fire Services Act 1947 requires a fire authority to provide the services for its area of such a fire brigade and such equipment as may be

necessary to meet efficiently all normal requirements and the efficient training of the members of the fire brigade. The service has a statutory obligation to train its members. West Yorkshire fire authority is unable to do that for 1992–93.
Despite its severe budget restraints, and recognising that it must conduct some training, the force has had to forgo some other activities. It appears that Pontefract fire authority has made the serious decision to withdraw emergency services from Pontefract fire station to enable it to send officers to the training school.
Emergency services in Pontefract are directly at the crossroads of the M62, the A 1 and major collieries and chemical plants. Special services are required to deal with major accidents and calamities. We are risking people's lives to enable the authority to work within its budgets. If that continues, it will be unable to use its equipment and fire officers will not be trained to fulfil their duties.
The order will cause the West Yorkshire fire service serious problems. I hope that the Minister will have second thoughts and will recognise the points that I have made.

Sir John Wheeler: I intervene briefly, having been stimulated to do so by the hon. Member for Pontefract and Castleford (Mr. Lofthouse), who made a point about the shortage of funds in his fire brigade area. In evidence to the Select Committee on Home Affairs, the chief inspector of fire services, Sir Reginald Doyle, said:
And yet we are still losing millions of pounds because there has not been proper management of staffing at Bank Holidays.
If the hon. Gentleman is concerned about the availability of resources in his fire brigade area, before the brigade cuts training or closes a vital service, he should ask about bank holiday working. Then he should ask further questions about sick leave. If he probes deeply enough, he will discover that the money about which he is so concerned can be recovered through an improvement in the management of the sick leave arrangements. There would then be no need for his brigade to cut training at the fire service college.
The order is entirely pragmatic. It will be in the best interests of the fire service in England and Wales. It will improve training arrangements and offer many opportunities for the fire service in the United Kingdom and elsewhere.

Mr. Ian McCartney: As we debate this order, a fire service somewhere in the country will be fighting a fire, and it will depend on the training, skill and expertise of the firefighter, the person in charge of the tender and the station officer whether they and the person they are trying to save will get out alive and without serious injury. That is why the college was originally set up in the 1960s under the Fire Services Act 1947.
Paragraph 1(a) of the order proposes a major change in the way in which the organisation will be funded. In the 1960s, the Holroyd committee reported to the House on the formation of a national centre of training excellence for the fire service. Under the 1947 Act, the House determined—through the Home Secretary of the day—to set up such a centre. It was set up to provide open and free opportunities for people to receive the necessary training


to enable them to carry out effectively their responsibilities to other members of the service and to the community. It was the final piece of the jigsaw in the setting up of a training facility to enhance a truly national, professional fire service, disciplined and dedicated to the provision of fire safety facilities in the United Kingdom.
The order sets back 30 years of commitment to the provision of a national centre of excellence, based on the concept of all brigades being involved in training to agreed standards and of the knowledge and expertise of all brigades being brought together so that training standards would improve and initiatives taken in research and development for the better use of fire service facilities and the production of new machinery and techniques. The order changes that dramatically, with the introduction of the charging principle.
The Minister tried to give the impression that there has been no opposition to the proposals, but he told only half the story. When the Central Fire Brigades Advisory Council met to consider the proposals, the unanimous view was that the proposals were unacceptable and, in the long term, a bad move for the management of the fire service in the United Kingdom. It was believed that they would undermine the very concept of the national training curriculum. The professional advice given to the Government has been unanimously opposed to the proposals, but the Minister implied that there had been no opposition to training fund status. That is only part of the tale. Advisers have opposed the proposals because of the principle of direct charging.
In 1991–92, my own authority—the Greater Manchester fire service—purchased 884 student weeks. It is the second largest fire authority in Europe. The price of a week was £219 per student. By 1992–93, the cost per student week will have risen to £595. The Minister has already confirmed that. That all amounts to £330,000 in additional costs not allowed for by a corresponding increase in the SSA.
The Guardian of 25 February included an article by the paper's labour correspondent, who had this to say about the problems affecting fire authorities because of direct charging:
Last week, the Association of County Councils considered problems that have arisen within the Fire Service since arrangements were changed to require brigades to pay the Fire Service College directly for training their employees. Some Fire authorities have been demanding repayment of officers' training costs when they moved to another authority. The ACC personnel sub-committee recommended that Fire authorities be told to keep to the spirit of the Purple Book agreement and recoup training costs only from officers leaving the Service. Extending repayment provisions to officers moving within the Fire Service could inhibit movement and `could also make officers reluctant to go on training courses'.
The major problems being created for brigades throughout the country are clearly evident from that.
After more than 30 years of cross-party acceptance of the idea of a national training scheme based at the national college, where personnel can improve their professionalism, these proposals seem nonsense. The college is acknowledged to be the best in the world, and the courses for officers and for junior officers are recognised as the premier courses of their kind.
To ensure the continuing quality of senior officers in the fire brigades in years to come, it is vital that, by means of this college, we maintain a throughput of brigade staff from all the fire brigades in the country. Hence the idea of free access: it meant that skilled personnel developing a

professional approach to the management of our fire services continually passed through the college. That is the very principle that the Government are attacking.
I want to ask the Minister of State some questions; I hope that he will get out his pen and think about them. From article 2, it is clear that the Secretary of State will consult the chief executive designate about the control and running of the college. Following the appointment of the chief executive, will future appointments be made from among officers working in local authority brigades? Will the commandant of the college continue to be someone involved in the running of the fire services in Britain, or will he be brought in from outside the service?
Will the resources identified in article 1(a) for 1992–93 for the costs of going to the college be ring-fenced by the Department to ensure that the money will be used to send people to the college? What proportion of the standard spending assessment does the Home Office intend to commit to training places at the college?
Finally, will the right hon. Gentleman clarify the make-up of those who will serve on the advisory body? Will he ensure that representatives of local authority associations serve on it; and that the Chief and Assistant Chief Fire Officers Association and the Fire Brigades Union serve on it? Will he guarantee that they will continue to serve once the agency is set up after 1 April? It is important that the Minister assure us that the board will be made up of those serving in the fire service and of the trade unions.

Mr. Allen McKay: I might have had more sympathy with some of the Minister's views if I had believed that he was intent on providing a service of better quality. Instead, the right hon. Gentleman and the hon. Member for Ryedale (Mr. Greenway) talked only about value for money. During my time in the fire service, it was value for life that mattered, not value for money. Life was the essential ingredient, and Moreton-in-Marsh college has provided value for life. The training scheme was based on the premise that saving life was the predominant factor.
By setting up a trading fund, it is clear that the Minister is concerned more with financial considerations than with saving life. That is something that I cannot and will not accept, and I hope that we shall vote against this measure.
Moreton-in-Marsh has provided training and expertise for fire officers in the United Kingdom and throughout the world, as well as for those in the three fighting services. The college has enabled every fire-fighting establishment to provide its fire officers with a first-class training. As a result, the United Kingdom has, without doubt, the finest firefighting service in the world. It also has the finest fire officers in the world.
Those who have received training at Moreton-in-Marsh have taken the results of their training elsewhere. To my knowledge, the benefits of the training have been enjoyed at Bannyroyd at Huddersfield and at the fire station where I worked.
Against that background, the Minister is intent on making finance the predominant factor. He is wrong. A trading fund has to make a profit. The right hon. Gentleman talks about about outside people, but who has trained those people? They were trained by the fire officers at Moreton-in-Marsh, and then they went into industry. It


seems that they will replace the training personnel at Moreton-in-Marsh. There are 470 applicants, but are there 470 vacancies?
Has the Minister talked to the Fire Brigades Union and the National Association of Fire Officers? We have not heard of any consultation of that sort, but the members of those organisations are at the sharp end. Those bodies provide the people who train at Moreton-in-Marsh and who enjoy the benefit of that training. We have heard nothing about the National Association of Fire Officers, or the Fire Brigades Union. Instead, we have had a financial statement.
The Minister has done a disservice to the fire service, the armed services and fire services throughout the world whose personnel have been trained at Moreton-in-Marsh. Those officers have shared their experiences and expertise.
For two years, the fire brigade of South Yorkshire has not been able to send any fire officers to Moreton-inMarsh because of the current financial arrangements. If officers cannot be sent to the college now, how will it be possible to send them when we have a trading establishment? If the college is not making a profit now and it is not possible to send officers to it for training, how will it ever be possible to send them to an establishment that is obliged to make a profit? The standard spending assessment of the South Yorkshire authority does not help matters.
The rate capping of the fire service has meant a cut in fire services. They are now 83 personnel undermanned. The staff are using machines which have been used for far longer than they should have been, and they are now using equipment that should have been replaced. Worst of all, they do not have the services and have not been able to send fire officers for training. The lack of training will filter down throughout the establishment, and the fire service will deteriorate.
The Government took on responsibility for the fire services, and the culmination of their responsibility is the fact that they are doing away with training. For what? It is to provide training facilities for which private industry will pay, as the hon. Member for Ryedale (Mr. Greenway) said, through the nose or over the odds.
What negotiations has the Minister had with the Fire Brigades Union, the fire officers association, and the establishment at Moreton-in-Marsh on what the effects will be? What will the order mean for the fire service establishment and what effect will the order have on the morale of the training service?
The Minister's actions mean deterioration purely and simply for money. The order is not the beginning of the privatisation of the fire service—there is a long way to go. Local authorities will be unable to train staff at Moreton-in-Marsh. The Government cannot bring themselves to close that centre, so they have had to consider a way of putting private money into it, by setting up the trading fund. The money is a loan. The loan must be paid back, but by whom? The Minister must answer that question. He will be proved wrong.

Mr. Peter Hardy: I am delighted to follow my hon. Friend the Member for Barnsley, West and Penistone (Mr. McKay). Hon. Members heard him

mention that he has had considerable experience in the fire service. His Yorkshire colleagues know very well that, in particular over the past few difficult years for the South Yorkshire fire service, my hon. Friend has given particularly signal and splendid service. I am glad to have this opportunity to pay tribute to my parliamentary neighbour, because he commands not only the respect of the House but the respect and affection of his Yorkshire colleagues, not least for his splendid work over the past two or three years in seeking to defend our area from the ravaging policies that the Government have inflicted upon it.
I was going to ask a series of questions, but they have all been asked. Therefore, I shall not detain the House for long, because the Minister has much to answer. It has already been made clear that we have the best fire service and the best fire training facilities in the world. The Minister looks very satisfied, but there is no cause for satisfaction in seeking to change that which is very good.
I have an example of the difference between the fire service of Britain and those of other so-called advanced countries. A few years ago, I saw in Europe—I shall not mention the area—a fire emergency. I timed it. It took 23 minutes for the appliance to go out. The Government Whip, the hon. Member for Sheffield, Hallam (Mr. Patnick),represents a Sheffield constituency for the time being. He will know that in our area—

Mr. Irvine Patnick: The hon. Gentleman was a candidate and was truly thrashed.

Mr. Hardy: I brought the majority down by a figure sufficient to unseat the Member of Parliament at the next election. I do not want to involve myself in an exchange of that nature.
There are industrial establishments in our area where dangerous materials are placed. Just after the incident that I described in Europe, there was a dangerous fire in what was then my constituency. There was no difficulty at all, because the South Yorkshire fire service was in attendance at an astonishing speed, with all the equipment and skills that it needed to deal with the fire.
The fire was so dangerous that a national newspaper rang up and said, "Is it true that you have had a fire near these dangerous materials?" The fire service said yes. The newspaper said, "How many were killed?" The fire service said, "None." It said, "How many people were badly burned?" The fire service said, "None." So, of course, nothing appeared in the newspaper. The fact remains that no one was killed or hurt. That achievement was possible because of the training that the senior officers of that force had received at Moreton-in-Marsh. They will not now receive that training in sufficient numbers.
Last year the Government trod on dangerous ground when they denied an adequate standard spending assessment to South Yorkshire and placed the authority and those responsible for fire services in our area in real difficulty. The authority had anguished meetings at which it strove to work out how it could meet the standards that the financial arrangements prevented it from meeting.
There is another point. I shall finish on it to leave the Minister time to reply to the many questions that have been put to him. Not far from my home there is a toxic waste plant. Several hon. Members know that I have


raised the matter of the plant many times. I live not far from it. I do not live as close to it as some of my constituents, who have cause for daily anxiety.
A few months ago, there was a fire at the plant. It was during the latter part of the last recess, and I was in my garden. I immediately got into my car and drove to the plant. I was at the scene within two minutes. I wondered how long I would have to wait before the South Yorkshire fire service arrived. I live only a mile away, and was there within two minutes. The fire service followed me down the road. It came with not merely the fire appliance but the decontamination unit which has to be present if there is a fire at that establishment, where there is poisonous and dangerous carcinogenic waste.
I went to the plant knowing that officers in the force were trained to meet the ever more complex challenges which face the fire service. We should understand that, every day, new materials are invented which present mankind with new dangers and complexities. Every day there are new procedures and new anxieties. The Minister may smirk, but would anyone have expected the disaster at King's Cross? Would anyone have expected that carcinogenic chemicals would be deposited and left for three years at the site in my constituency?
If the fire service is not properly skilled to know how to deal with and respond to new materials and challenges, there is public risk. The fundamental obligation of any Government is to ensure public safety and public order. We know how much the Government have failed in public order. Their dangerous and dogmatic approach to this matter illustrates the clear and obvious fact that, no matter what words of support are received from the hon. Gentlemen behind the Minister, the fact remains that this step is a dangerous one. It is not in accordance with the advice of people in the provincial fire services. It is a dangerous step, which is being pursued purely because of the Government's attachment to private greed and public dogma.

Mr. John Patten: With the leave of the House, I shall reply to the debate.
Among all the speeches made by Opposition Members, I listened with the greatest care to that made by the hon. Member for Barnsley, West and Penistone (Mr. McKay), who has signified his intention to lay down the burden of representing that constituency shortly. He spoke with the authority of someone who has served in the fire service. I respect him for that, and I listened carefully to what he had to say. I can assure him that nothing in the plans for the fire services college will lead to any diminution in training. Otherwise, the Government and Her Majesty's chief inspector of fire services would not have countenanced the changes that have been proposed. I found the hon. Gentleman's speech rational, but sometimes new developments come along which perhaps were not around when the hon. Gentleman was training to be a fireman.
The speech of the hon. Member for Huddersfield (Mr. Sheerman) was much less rational. I cannot understand what comes over the hon. Gentleman. In Committee he is a hard-hitting, well-briefed debater, but if one puts him near the Dispatch Box, something seems to happen. It happened yesterday, the day before and this evening. His colour changes, veins begin to throb and eyes begin to bulge. I understand that Walworth road has purchased a

video, to be used for training purposes, of the explosion that the hon. Gentleman set off during the final stages of the bail statement. I regret that Dr. Jekyll upstairs is replaced by Mr. Hyde down here.
I repeat that the college has undertaken to meet all the demands of local authority fire brigades for training, before accepting applications from the commercial sector. That also answers the hon. Member for Wentworth (Mr. Hardy).
The hon. Members for Huddersfield and for Makerfield (Mr. McCartney) mentioned consultation.

Mr. Lofthouse: rose—

Mr. Patten: I must try to answer the debate in the few minutes that I have left.
I understand that the hon. Member for Makerfield has spoken on those issues at some length in Committee. On consultation, while at an earlier stage the hon. Gentleman is right that a number of the bodies concerned did not like the idea of moving to a trading fund, as the idea has been examined closely, they have been persuaded—so much so that the Association of County Councils, the Association of Metropolitan Authorities, the Fire Brigades Union and the National Association of Fire Officers and other fire interests were fully consulted about the trading fund proposal and not one raised an objection to the order being made.
The Central Fire Brigades Advisory Council for England and Wales was mentioned. It is correct that it opposed the introduction of direct charging, but once that was introduced in 1991–92, it raised no objections to the college becoming a trading fund, to give it greater flexibility, which it undoubtedly needs.

Mr. Sheerman: How much time did the Minister spend in Moreton-in-Marsh consulting and listening to views and when did he last go there?

Mr. Patten: My right hon. and noble Friend Earl Ferrers in the other place is ministerially responsible for the issues and has carried out consultations on the matters. He has made it clear that, if the AMA and other organisations wish to come to see him to discuss standards at any stage, they will be welcome.
The hon. Member for Huddersfield is gesticulating. You can see the temperature rising, Mr. Deputy Speaker. We can all see the signs coming. I invite him to get to his feet if he wants to intervene again in my speech. He made a serious mistake in attributing to Her Majesty's chief inspector of fire services the statement that he objected to the setting up of the trading fund. I have it on the highest authority that the chief inspector supported the move to agency status and to the trading fund.

Mr. Sheerman: I did not say that.

Mr. Patten: When the hon. Gentleman has a look at Hansard tomorrow, he will see that he attributed objections to the inspector of constabulary.
I shall give him the opportunity to intervene to make it quite clear that he does not attribute that to the inspector of fire services.

Mr. Sheerman: The Minister of State is misinterpreting what I said. I said that Her Majesty's inspector had a whole catalogue of concerns and worries about the current state of the fire service. He will check in Hansard and find that that is true. I am only sad that he and his colleague,


the Chairman of the Select Committee on Home Affairs, the hon. Member for Westminster, North (Sir J. Wheeler), used my remarks to launch an attack on the fire service and on the police service—on their sickness record and their public holiday working period.

Mr. Patten: We shall look carefully at the record and listen to the tapes, and if Hansard records that which I believe the hon. Member for Huddersfield said, I hope that he will write to Her Majesty's inspector to withdraw his assertion, because it is a serious matter.
The demand for college places is already good. There are firm bookings for more than 18,000 student weeks in the 1992–93 course, and that augurs well for the success of the trading fund in the first year, despite what the hon. Member for Huddersfield said.
The hon. Gentleman spoke about Buckinghamshire. The Buckinghamshire fire authority has already booked 153 student weeks for 1992–93, which is a satisfactory level.
The chief executive post will be filled after open competition when it next becomes vacant. Home Office Ministers will naturally ensure that fire service needs are fully taken into account when determining levels of public expenditure. That is why there was a 16 per cent. increase this year and why there will be an 8·4 per cent. increase next year.
The order is a classic example of obtaining better value for money for the taxpayer and the community charge payer. A vote against it is a vote in favour of charging fire authorities higher prices for training. Those who vote against the order will lay extra burdens on local fire authorities. I commend this excellent and far-reaching measure to the House.

Question put:—

The House divided: Ayes 80, Noes 68.

Division No. 102]
[11.56 pm


AYES


Alexander, Richard
Davis, David (Boothferry)


Amess, David
Favell, Tony


Arbuthnot, James
Forman, Nigel


Arnold, Jacques (Gravesham)
Goodlad, Rt Hon Alastair


Baker, Nicholas (Dorset N)
Greenway, John (Ryedale)


Beggs, Roy
Gregory, Conal


Bennett, Nicholas (Pembroke)
Hargreaves, A. (B'ham H'll Gr')


Blackburn, Dr John G.
Hargreaves, Ken (Hyndburn)


Bowis, John
Harris, David


Brazier, Julian
Hawkins, Christopher


Brooke, Rt Hon Peter
Hayward, Robert


Brown, Michael (Brigg &amp; Cl't's)
Hind, Kenneth


Burt, Alistair
Howarth, G. (Cannock &amp; B'wd)


Carlisle, John, (Luton N)
Hughes, Robert G. (Harrow W)


Carrington, Matthew
Hunter, Andrew


Carttiss, Michael
Irvine, Michael


Cash, William
Jack, Michael


Chapman, Sydney
Jones, Gwilym (Cardiff N)


Chope, Christopher
King, Roger (B'ham N'thfield)


Clark, Dr Michael (Rochford)
Kirkhope, Timothy


Couchman, James
Knight, Greg (Derby North)


Currie, Mrs Edwina
Lester, Jim (Broxtowe)


Davies, Q. (Stamf'd &amp; Spald'g)
Lightbown, David





Lord, Michael
Stewart, Andy (Sherwood)


MacGregor, Rt Hon John
Summerson, Hugo


McNair-Wilson, Sir Michael
Taylor, Ian (Esher)


Mans, Keith
Taylor, John M (Solihull)


Mawhinney, Dr Brian
Thompson, Patrick (Norwich N)


Mayhew, Rt Hon Sir Patrick
Thurnham, Peter


Mitchell, Andrew (Gedling)
Waller, Gary


Neubert, Sir Michael
Wardle, Charles (Bexhill)


Nicholls, Patrick
Wells, Bowen


Norris, Steve
Wheeler, Sir John


Paice, James
Widdecombe, Ann


Patten, Rt Hon John
Wilkinson, John


Ross, William (Londonderry E)
Winterton, Mrs Ann


Shaw, David (Dover)
Winterton, Nicholas


Shaw, Sir Giles (Pudsey)
Wood, Timothy


Shepherd, Colin (Hereford)



Smith, Tim (Beaconsfield)
Tellers for the Ayes:


Stern, Michael
Mr. Tim Boswell and


Stevens, Lewis
Mr. Irvine Patrick.


NOES


Barnes, Harry (Derbyshire NE)
Jones, Barry (Alyn &amp; Deeside)


Barron, Kevin
Jones, Martyn (Clwyd S W)


Battle, John
Kilfoyle, Peter


Benton, Joseph
Leadbitter, Ted


Boyes, Roland
Livsey, Richard


Bradley, Keith
Lloyd, Tony (Stretford)


Brown, Nicholas (Newcastle E)
Lofthouse, Geoffrey


Callaghan, Jim
McAvoy, Thomas


Campbell-Savours, D. N.
McCartney, Ian


Clelland, David
McMaster, Gordon


Cook, Frank (Stockton N)
Mahon, Mrs Alice


Cook, Robin (Livingston)
Marshall, Jim (Leicester S)


Corbett, Robin
Meale, Alan


Cryer, Bob
Michael, Alun


Cunliffe, Lawrence
Morgan, Rhodri


Cunningham, Dr John
O'Brien, William



Davies, Ron (Caerphilly)
O'Hara, Edward


Dixon, Don
Powell, Ray (Ogmore)


Dunnachie, Jimmy
Primarolo, Dawn


Edwards, Huw
Quin, Ms Joyce


Enright, Derek
Rooney, Terence


Evans, John (St Helens N)
Sheerman, Barry


Flynn, Paul
Skinner, Dennis


Foster, Derek
Smith, Andrew (Oxford E)


Foulkes, George
Stott, Roger


Godman, Dr Norman A.
Thompson, Jack (Wansbeck)


Golding, Mrs Llin
Warden, Gareth (Gower)


Graham, Thomas
Welsh, Michael (Doncaster N)


Griffiths, Nigel (Edinburgh S)
Wilson, Brian


Hardy, Peter
Winnick, David


Haynes, Frank
Wise, Mrs Audrey


Henderson, Doug
Wray, Jimmy


Hinchliffe, David



Hoyle, Doug
Tellers for the Noes:


Hughes, Robert (Aberdeen N)
Mr. Eric Illsley and


Hughes, Simon (Southwark)
Mr. Allen McKay.

Question accordingly agreed to.

Resolved,
That the draft Fire Service College Trading Fund Order 1992, which was laid before this House on 1lth February, be approved.

ESTIMATES

Motion made, and Question put forthwith, pursuant to Standing Order No. 131 (Liaison Committee)

That this House agrees with the Report [24th February] of the Liaison Committee.—[Mr. Wood.]

Question agreed to.

Mr. Michael Birkett

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Wood.]

Mr. Andrew Hunter: Let me first set the scene. I introduce on the one hand my constituent, Mr. Michael Birkett, and on the other hand that august body, the Law Society; and I invoke the lay observer as an impartial referee—more precisely, the 16th annual report of the lay observer 1990. Those are the main characters in the saga that I want to describe.
I am grateful to my right hon. and learned Friend the Attorney-General for being here to reply. I am fully aware —and I stress this—that he cannot comment on Michael Birkett's specific case and his long-running dispute with the Law Society. 1 neither ask nor expect him to do so. I draw a specific case to the attention of my right hon. and learned Friend and the House in a desire to promote a brief debate on the wider issues that emanate from it.
I raise the case for two further reasons. I hope that by so doing I will increase awareness outside the House of the particular injustice that my constituent suffered, and perhaps contribute to its resolution. I hope also that tonight's debate will play a part—albeit only a small part —in persuading the Law Society that it must put its own house in order. I contend that the society's failure to do so significantly contributes to the public's growing lack of confidence in the legal profession and in the process of justice. Those are undesirable trends, and they should be put right.
In 1974, Michael Birkett became involved in litigation. The solicitor acting for him was a certain Mr. Brian Fulwell of Fulwell and Partners, Bristol. Michael Birkett received from Mr. Fulwell a series of unwarranted demands for unwarranted sums of money. They were accompanied by threats not to represent Mr. Birkett at imminent, prearranged court proceedings. In indignation, my constituent complained to the Law Society. He was right to do so.
Even in 1974, the Law Society must have known—and most certainly should have known—that Fulwell and Partners was guilty of misconduct in its submission of interim bills. Eventually, the outcome of litigation entirely exonerated my constituent: each of his allegations was substantiated.
It is remarkable that the process of litigation should have lasted 12 years. During that time, and as a result of the drawn-out process of litigation, my constituent suffered—I use the legal phrase—loss, distress and humiliation. I strongly contend that none of it would have happened if the Law Society had properly investigated the allegations of misconduct, and properly adjudicated the consequences of its own shortcomings. I further contend that the Law Society should have mounted a proper and prompt investigation of the allegations.
Let me now turn to the subject of the Law Society, and refer specifically to the standards that it should set and should demand from solicitors. Addressing the Law Society's conference in October 1991, the president, Mr. Philip Ely, warned that the future of the solicitor's profession and its integrity were threatened, because the society protected the inefficient and dishonest solicitor—a noble and bold sentiment for him to express.
I invite my right hon. and learned Friend the Attorney-General to consider a simple proposition. In the civil courts, it is the solicitor who provides the point of access for the citizen to the administration of justice and the process of law. It is, moreover, the quality of the service provided by the solicitor that largely determines that quality of justice that the citizen will subsequently receive. The solicitor has always been the most frequent advocate in the lower courts, and recently he has been given the right to a wider audience in higher courts. The solicitor is an officer of the court.
The integrity and competence of the court's officers are fundamental to the quality and reputation of justice. It is the statutory duty of the Law Society to set and maintain standards that are acceptable to the profession and the public. I have no doubt that a large majority of solicitors serve their clients and the courts with competence and integrity; however, the point that has rightly alarmed the Law Society is that a significant number of solicitors do not have acceptable standards.
Evidence is provided by the claims made on the compensation fund for losses resulting from the activities of dishonest and defaulting solicitors. They rose from £6–7 million in 1988 to £14·6 million in 1989, and to £18–3 million in 1990. The number of complaints to the Law Society about solicitors rose from 5,000 in 1977 to 9,000 in 1985, and to a record 18,000 in 1987. Since then, there have been more than 16,000 each year.
An inquiry in the late 1970s followed the highly publicised dispute between Mr. Leslie Parsons, a business man, and his solicitor, Mr. Glanville Davies, a senior member of the council of the Law Society. In due course, the inquiry reported:
We have found administrative failings, mistakes, wrong decisions, errors of judgement, failures in communication, high-handedness and insensitivity on a scale that must have done great harm to the Law Society. The whole episode is a disgrace to the Law Society.
There could scarcely be a more damning verdict.
In the past decade there have, of course, been successive improvements in the system for handling complaints against solicitors. In due course the Solicitors Complaints Bureau emerged, but it is not apparent that the Law Society has effected sufficient improvements in the overall standards of the profession. As I shall shortly argue, the society seeks to treat the symptoms but not the disease. Unless proper standards are enforced and while the society, either advertently or inadvertently, protects the dishonest and incompetent solicitor, there can only be further and increasing defaults among solicitors.
The remedy is not the one put forward by the president at the Law Society conference last October. Among other points, Mr. Philip Ely suggested that the profession should re-examine the practice of compensating for dishonesty, wherever and however caused. It is entirely unacceptable that the profession should ask for a reduction in the degree of protection afforded to those who use its services.
Next I turn to the lay observer's report. The 16th annual report of the lay observer, 1990, was, coincidentally, laid before the House a year ago today. It makes alarming reading. There are two themes that I wish to select. First, the report indicates that the professional standards of the Law Society itself remain unacceptably low. They appear not to have risen above the low tide mark that the society's own inquiry exposed in the Parsons-Davies case in the late 1970s. Secondly, it appears


from the report that the society may already have embarked unofficially on the policy suggested by its president—namely, of reducing the amount of cover for the public through the statutory compensation fund. The case of my constituent, Michael Birkett, illustrates both points.
To expand, first, on the society's standards, paragraphs 63 to 75 comment on the Law Society's handling of my constituent's complaint. The society and the bureau took 16 years to complete their investigation. The lay observer rightly sees this as a matter of great concern and serious criticism. Paragraph 69 reads:
In my report of August 1990 I expressed great concern and seriously criticised the Law Society/Bureau for the fact that it took 16 years to deal with BI's"—
the initials of my constituent—"complaints."
The society, on the other hand, does not see the delay as a matter for concern or regret. It has produced a series of excuses to justify its delay in investigating a solicitor who was eventually imprisoned for defrauding 26 other clients in the meantime. The Law Society might not have taken any action, even to this day, were it not for the prior action of a third party who forced the solicitor's insolvency.
An analysis of the detail of the report finds the society and/or the bureau culpable of no fewer than 24 instances of error, omission, perversity, prejudice and dereliction of duty. Among these was the loss or destruction of files containing the first eight years' correspondence and records. The society made no attempt to obtain copies of the missing letters from my constituent. To this day it has made no efforts to obtain copies. It proceeded to determine the complaint without them.
In his more detailed report of August 1990 the lay observer lists more than a dozen serious allegations of misconduct, none of which, he concluded, the Law Society ever properly considered. Is the society simply guilty of gross incompetence and disdain for duty, or could it be that it is trying to avoid financial consequences which would otherwise fall on its compensation and indemnity provisions? The society knows full well that proper consideration of Michael Birkett's complaint would result in another rightful and substantial claim on its funds.
That leads to the second point of my concern about the lay observer's report. The Law Society's reducing financial responsibility for dishonest and incompetent solicitors is a matter of concern. I stress that that is not the perception and experience of my constituent; the lay observer makes the same point. In paragraph 143 he records his concern that the society has imposed its own restrictions on access to the fund so as to deny clients some of the protection which the statutory funds should be providing.
The lay observer shares my constituent's belief that the Law Society is already operating an unofficial policy designed to reduce liability to meet in full the proper claims made on it for compensation.
The threat to the future of the solicitors' profession will not be countered by the president's proposition to the Law Society's conference last October. He said, as reported in The Daily Telegraph of 18 October last year, that it is
time for the profession to examine afresh that it would pay for dishonesty wherever and however caused.
I appreciate that my right hon. and learned Friend cannot comment on the individual case of Michael Birkett.

I invite him, however, to consider its wider implications, and from the particular to consider the general. As the lay observer reports, the case of Michael Birkett illustrates that all is not well with the administration of justice and the process of law. The erosion of public confidence parallels the erosion of the standards and the example set by the Law Society. I suggest that the two are related. The Law Society must put its own house in order, or it must be put into order, so that others do not experience what Michael Birkett has experienced.

The Attorney-General (Sir Patrick Mayhew): I should like to congratulate my hon. Friend the Member for Basingstoke (Mr. Hunter) on having secured this Adjournment debate for the purpose of referring to this most disturbing case. My hon. Friend has spoken the more effectively for his refusal to spice his speech with adjectives, since he was dealing with an investigation of a solicitor's alleged misconduct that itself extended over 16 years. Since that was the case, his self-restraint was indeed deserving of reward. As I say, I think his speech was much the more effective by reason of it.
It is entirely right that he should have drawn attention, as he has done, in this context to the lay observer's 16th report. I agree entirely with what he has said about the great importance of the legal profession attracting, and deserving to attract, the confidence of the public. I will have something to say later about the privilege of self-regulation. My hon. Friend's speech was further tempered by realism in that he acknowledged—and I am grateful for it—that I cannot myself achieve redress for his constituent, Mr. Birkett.
The solicitors' profession is entirely independent and self-regulating. The professional practice, conduct and discipline of solicitors are regulated by statute, as are the rights to practise as a solicitor. Parliament therefore has an opportunity to discuss the statutory regulation of the Law Society whenever any changes are sought to the present arrangements.
The lay observer, to whom my hon. Friend has referred, was established by the Solicitors Act 1974 to examine allegations made by members of the public concerning the society's treatment of complaints about solicitors. Over the years that followed, it became apparent that the existence of that office by itself was not proving to be a sufficient spur to the profession to improve its procedures for dealing swiftly and effectively with alleged failures in professional competence. The Government's White Paper entitled, "Legal Services: A Framework for the Future", published in 1989, accordingly recommended that the lay observer should be replaced by a legal services ombudsman with increased powers.
One of the matters on which the Government expressed particular concern was the problem identified by the lay observer in his report on Mr. Birkett's case. In that case, he had criticised the policy of the professional purposes department, as it then was, of the Law Society and subsequently of the Solicitors Complaints Bureau, which was its successor, not to investigate complaints if there was litigation in prospect or in progress.
The Master of the Rolls indicated in 1987 that this policy could be unsatisfactory and produce unfair results.
He said:
It is only if there is a risk that the investigation of misconduct will in some way muddy the waters of justice … that the Solicitors Complaints Bureau should, in my judgment, refrain from investigating a case for misconduct".
The bureau has since changed its policy. I understand that the practice now is, wherever possible, to investigate complaints straight away where the matters complained of are the subject of court proceedings, whatever the cause of the litigation, including allegations of negligence by a solicitor. The bureau's case workers were notified of this policy change. In addition, a complainant who has been informed that his case will not be investigated while associated litigation is pending may seek to have that decision reviewed. I will be interested to see if the ombudsman comments on the operation of the revised policy in his annual report. I recognise that, unfortunately, this change in policy has come too late to benefit Mr. Birkett.
The new statutory office of legal services ombudsman was subsequently created by the Courts and Legal Services Act 1990. The ombudsman is completely independent of Government and of the profession. It is a source of encouragement to all of us who share the interest of my hon. Friend the Member for Basingstoke that the first incumbent is a person for whose standing and experience the legal profession has such high regard.
The ombudsman has powers that go beyond those of the old lay observer. He is able to investigate not only the way in which complaints are handled by the relevant professional body but the original complaint. In addition, although the ombudsman would not normally examine a case until the profession's own complaints procedure had been exhausted, he has a discretion to investigate if it appears to him that the professional body's investigation process is being unreasonably delayed. When one considers that Mr. Birkett's original complaint was made in 1974 and the Law Society's final decision was given in 1990, one can see the value of this provision.
The ombudsman is able to refer a complaint back to the professional body with a recommendation that it look at it again. In addition, he has powers to recommend that either the practitioner or the professional body pay compensation to the client. This power is backed up by a publicity sanction under which, where a practitioner or a professional body refuses to comply with the ombudsman's recommendations, the ombudsman can either require them to make public their reasons for not doing so, or he can publicise their non-compliance and recover the costs for so doing from the individual practitioner or from the professional body. These increased powers—I remember debating them in the House nearly two years ago—represent a significant improvement in the way in which the ombudsman is able to investigate individual complaints, and to achieve redress for complainants. In addition, his remit has been extended to cover complaints against barristers and licensed conveyancers. In addition to 14 recommendations to the Solicitors Complaints Bureau that individual cases be reinvestigated, he has made 16 recommendations that compensation should be paid to complainants, for amounts ranging from £200 to £1,500. In one case, the complaints bureau has been required to pay compensation; in the other 15 cases, solicitors have been required to do so.
The ombudsman is uniquely placed to see where procedures may be operating unfairly and to the detriment of complainants. He is accordingly authorised to make

general recommendations to the professional bodies about their complaints handling procedures, as well as to comment on procedures adopted in individual cases. The professional bodies are required by statute to have regard to any such recommendation. That is a significant improvement on what obtained before. I know that, since the White Paper on legal services, much has been done to improve the handling of complaints by the Solicitors Complaints Bureau and by the Law Society to improve and maintain the standard of care accorded to clients. I fear that Mr. Birkett's case vividly shows that there has been scope for that.
The Solicitors Complaints Bureau was set up in 1986 to replace the professional purposes department, which had previously handled complaints about the profession. This earlier arrangement had been criticised by many on the ground that it could not be shown to be sufficiently impartial. The complaints bureau was therefore set up to be independent of the Law Society—a major change—with a lay-dominated investigation committee to monitor its performance. The number of complaints received by the bureau is substantial. In 1990 there were nearly 18,000.
Over the past year, there have been significant changes in the way in which the bureau conducts its work. From 1 April last year, the bureau has been able to order a solicitor to compensate clients for work which is not of an adequate professional standard, up to a limit of £1,000, in addition to taking disciplinary action. In cases of negligence, where the complainant agrees, the bureau can also pass complaints of major negligence direct to the professional insurers, the solicitors indemnity fund. This will obviate the need for complainants in every case of negligence to take legal action. In some cases, particularly where the issue of negligence is disputed, this will still be unavoidable.
The bureau has shifted the emphasis of its work away from the investigation of disciplinary offences, which can be extremely time-consuming, towards conciliation. This informal approach aims to find a solution to the problem which is acceptable both to the client and to the solicitor, and the bureau now has a network of local conciliators who are used in simpler cases. In more complex cases, and where there remain outstanding issues of conduct or inadequate professional services, the bureau's staff will investigate the matter.
On the basis that prevention is better than cure, the Law Society has, from 1 May 1991, required all solicitors' firms to introduce new procedures for handling complaints in-house. In addition, solicitors are required to explain their procedures for handling cases at the outset of a case. The complaints bureau has also introduced a help line for clients rather than for solicitors, to assist complainants who are not certain whether they have a complaint or how to pursue it. I very much hope that these improvements in procedure will help to avoid the recurrence of cases such as Mr. Birkett's or of cases that even approach it.
In his report on Mr. Birkett's case, the lay observer said that it must be a matter of great concern and serious criticism that it took the professional purposes department —and the successor complaints bureau—16 years to reach a conclusion on Mr. Birkett's complaints. It may be enough for me to say tonight that I strongly endorse that opinion.
The Government have since established an entirely new framework, and the legal services ombudsman, with his new and much more effective powers, is now in place and


at work. It is for the professions themselves to ensure that procedures are devised and implemented which fully justify their privilege of self-regulation. That is a valuable privilege. However, if it is to continue, its existence must be

seen to secure the interests not primarily of the profession and its members but of the public whom it is the true purpose of every profession to serve.
Question put and agreed to.
Adjourned accordingly at twenty-six minutes to One o'clock.